This article was originally published on ETFTrends.com.
While world markets stumbled this year, investors have been betting on a rebound in the developing economies, funneling billions of dollars into emerging market-related ETFs.
U.S.-listed ETFs that track developing countries, along with targeted country-specific ETFs, attracted $1.28 billion for the week ended November 23, marking their sixth consecutive week of inflows, and experienced total inflows of around $20.5 billion for the year, Bloomberg reports.
The turnaround on emerging market sentiment is a stark contrast to the over $10 billion in redemptions the emerging market ETFs experienced in the first half of the year after the steep sell-off from the initial trade war fears.
“Double upgrade” to emerging-market stocks
Money managers from Aberdeen Standard Investments, Schroders Plc, Goldman Sachs Asset Management, BlackRock Inc. and Morgan Stanley, which announced a “double upgrade” to emerging-market stocks, began to overweight the emerging markets after a hint that the Federal Reserve could pause on rate hikes next year due to a slowdown in growth.
Furthermore, traders grew more optimistic over the emerging market outlook ahead of the sit down between President Xi Jinping and Donald Trump on hopes of a resolution to the escalating trade war between China and the U.S. Daniel Morris at BNP Paribas Asset Management argued that the smallest steps to resolving the trade dispute would be a welcomed relief.
“A softer tone expected from the Fed, a possible trade detente at the G-20 meeting and expectations of a weaker dollar in 2019 are key positive themes,” Greg Lesko, a money manager at Deltec Asset Management, told Bloomberg. “Plus, the market is down so much.”
For more information on global markets, visit our global ETFs category.
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