Why emerging market ETFs are a favorite asset sub-class lately

Where's the money? A key guide to asset classes and investments (Part 5 of 7)

(Continued from Part 4)

Emerging market ETFs outperform U.S. equity ETFs

Just like the past week, emerging market ETFs have remained a favorite asset sub-class over the past month, with the iShares MSCI Emerging Markets ETF (EEM) leading the pack at $5.2 billion in inflows.

While investors reacted positively to the announcement of a taper, leading to a 73 point increase, to 1,848.36, between December 13, 2013 (the day the Fed announced the taper), and December 31, 2013, the enthusiasm soon died down due to emerging market turmoil coupled with subdued indicators on the back of extreme weather conditions. The S&P500 and DJIA have remained volatile for the past month, as you can see in the graph below.

The iShares Core S&P 500 ETF (IVV), a fund that invests in large caps like Apple Inc. (AAPL) and Exxon Mobil (XOM), has been the best-performing U.S. Equity ETF, with inflows of $2.5 billion. However, the SPDR S&P 500 ETF Trust (SPY), which mirrors the S&P500 index, has lost $2 billion over the past month.

To learn about how the world economy has affected fund flows for fixed income ETFs over the past month, read on to Part 6 of this series.

Continue to Part 6

Browse this series on Market Realist:

• Part 1 - A key guide to asset classes: Where can you invest your money?

• Part 2 - Must-know: Why invest your money in fixed income ETFs?

• Part 3 - Why equity ETFs like EEM showed mixed performance last week