ETF investors also threw money into overseas markets where valuations appear cheaper relative to the loftier prices in the U.S. – U.S. markets are trading at forward price-to-earnings of around 18 times, compared to historical averages of 15 times. Year-to-date, IEMG and VWO are among the top 10 ETFs in terms of new assets added. Last month, IEMG added more than $838 million in new assets, making it one of the top asset gatherers in July.

“Strictly speaking you could make an argument that EM is underallocated on some of the stats above. Having said that, the increase in EM ETF AUM has been heroic and whenever you see a surge in assets like that, regardless of over/underallocation, it makes you stop to think,” notes Seeking Alpha.

Earlier this year, IEMG surpassed EEM to become the second-largest emerging markets ETF by assets. Underscoring the point that investors may be under-allocated to emerging markets, just four of the 100 largest ETFs are emerging markets funds.

For more information on the ETF market, visit our ETF performance reports category.

Tom Lydon’s clients own shares of VWO.