Some market observers are increasingly enthusiastic about emerging markets equities. In a recent note, Goldman Sachs Asset Management (GSAM) said developing world stocks are attractive after last month’s sell-off trimmed valuations.
Emerging markets are enjoying improved fundamentals thanks to corporate earnings improving as economic growth rebounds and strengthening currencies against the U.S. dollar on the back of improved economic outlooks. Investors would do well to not simply focus on the weak dollar or supposedly compelling valuations on emerging markets stocks.
“Unlike previous market corrections, when developing nations suffered big outflows, clients have been adding more money to the riskiest assets, said Sheila Patel, the chief executive officer of International GSAM,” reports Bloomberg. “That’s been a sound strategy during the past month as emerging-market stocks returned 3.1 percent, beating the 2.5 percent gain for U.S. peers.”
In the world of exchange traded funds, investors are embracing emerging markets funds. For example, the iShares Core MSCI Emerging Markets ETF (NYSEArca: IEMG) and the iShares MSCI Emerging Markets ETF (NYSEArca: EEM) are both among this year’s top 10 asset-gathering ETFs.
Investors have added $5.74 billion in new money to IEMG year-to-date, a total surpassed by just two other ETFs. EEM has seen 2018 inflows of $2.6 billion, a total exceeded by just six other ETFs.