Flows Into Emerging Markets ETFs Aren't Always Hot

Exchange traded funds tracking stocks outside the U.S. are among this year’s most prolific asset gatherers with emerging markets funds making significant contributions to that trend. Although emerging markets ETFs are adding assets in a big way, that does not mean this is a hot a trade or that an emerging markets ETF bubble is on the horizon.

The first half of 2017 was kind to emerging markets and the related exchange traded funds. Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares MSCI Emerging Markets ETF (NYSEArca: EEM), two of the largest emerging markets ETFs, are surging and gathering assets at a rapid rate.

Moreover, the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG), the low cost alternative to EEM, is one of this year’s top asset-gathering ETFs as investors have continually looked for low-fee options when embracing ex-US equities.

“Dedicated emerging market equity ETF AUM has roughly doubled over the past year to a record high,” according to Seeking Alpha. “It’s interesting to note the disparity between EM as a % of global market cap in contrast to EM as a % of global GDP, let alone the other stats.”

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