The widely followed MSCI Emerging Markets Index entered Wednesday with a year-to-date loss of 15.62%, underscoring investors’ reluctance to embrace emerging markets assets this year. Some new data indicate that trend may reverse in 2019.
Data suggest that for a significant portion of the current quarter, investors have been embracing emerging markets ETFs. In 2018, some investors have remained devoted to exchange traded funds, such as the Vanguard FTSE Emerging Markets ETF (NYSEArca: VWO) and the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG).
“Bank of America Merrill Lynch hasn’t found ‘real deep-rooted bearishness’ about emerging markets after meeting with clients, but finds that investors are wary about the effect on emerging markets of trade tensions and an uncertain political outlook,” according to Seeking Alpha.
Bank of America Merrill Lynch surveyed approximately 150 investors.
Looking For Value
Emerging markets stocks and the related exchange traded funds have been among the most obvious laggards this year, but recent data points indicate traders are buying some marquee ETFs tracking developing economies. After the recent pullback in the equities market, bargain hunters may look to beleaguered emerging market stocks and region-related ETFs for value.
Bank of America Merrill Lynch said: “We sense investors are looking to to long rather than short early next year,” providing that there’s a “convincing” catalyst between “a more tactical Fed, a trade war truce, and some evidence that the China stimulus is finally showing some positive impact,” according to Seeking Alpha.