Smarter Way to Play an Emerging Market Rebound

Emerging market funds – targeting shares in fast-growing Asian and South American countries – have delivered losses averaging 12pc over the past three years.  Much of the damage occurred in recent months as anxiety about the strength of economic growth rocked the markets. An upward move in US interest rates – which did not materialise last week, but will eventually arrive – is expected to knock these regions further.  Heavy commodity price falls, which have also depressed emerging market currencies, show no sign of reversing.

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Three Reasons to Buy Emerging Markets Stocks

For those of you who haven’t noticed, emerging markets have been on a tear.  Since Jan. 31, the S&P 500 has gained a little more than 7%. However, the iShares MSCI Emerging Markets Index Fund and the Vanguard FTSE Emerging Markets ETF are each up almost double that — 12%.  Those are two of the largest ETFs on the planet, with $84 billion in assets under management between the two of them. So when emerging market funds like these move, investors better start paying attention.

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Cash Trickles Back to Emerging Markets

Investors are starting to move back in to emerging stocks and bonds after a long hiatus, data from fund tracker EPFR shows, but the economic slowdown gripping the developing world is likely to constrain market rallies. Emerging stock and bond funds saw their first weekly inflows after more than $50 billion fled in the first three months of 2014, with equities snapping a 22-week losing streak, Boston-based EPFR Global said. The company, which tracks funds with $23 trillion in assets, released details of first quarter flows late on Thursday, showing that all emerging equity fund categories had shed $41 billion, following $26.7 billion losses in 2013.

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-Igor P Purlantov

Emerging Markets Regaining Confidence of ETF Investors

Emerging markets drew the largest investment flows among U.S. exchange-traded funds last week on bets developing-nation stocks will rebound after they fell to the cheapest relative to developed-nation peers since 2006.  Investors added a net $1.6 billion into ETFs focused on emerging-market equities and bonds in the five days through March 28, helping trim the outflow this year to $12 billion. Flows into the iShares MSCI Emerging Markets ETF, the second-largest of its kind, totaled $1.4 billion, the most among the almost 2,000 U.S.-based funds tracked by Bloomberg.

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-Igor P Purlantov