Lydon said most of the biggest ETF inflows during the past year have been outside the U.S., in developed and emerging markets.
“U.S. investors have had that home country bias where we’ve been really comfortable with the growth that we’ve seen,” he said. “We’re seeing valuations overseas picking up.”
Lydon pointed to the PowerShares S&P Emerging Markets ETF (EEMO) and the SPDR S&P Emerging Markets Dividend ETF (NYSEArca: EDIV) as great emerging market plays.
“When you look at Tencent and Alibaba, if you don’t have those types of companies in your portfolio, grab some Emerging Markets ETFs,” he said. “Especially when PE is around 12, compared to 20 in the U.S.”
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