ETF investors continue to back emerging markets despite recent turmoil

According to data from TrackInsight, emerging stocks captured the most flows across all asset classes last month with inflows €16.1bn, while emerging bonds were also in the black with positive flows of €129m.

Investors appeared to shrug off ongoing concerns in Argentina and Turkey.

The lira has plummeted 40% against the US dollar so far this year amid longer-term concerns about the mis-management of Turkey's over-heating economy and a row between the US over refusal to release an American pastor who has been detained for two years.

This refusal led US President Donald Trump to approve doubling tariffs on Turkish steel and aluminium with Turkey retaliating by raising tariffs on American cars, alcohol and cigarettes.

Meanwhile, in Argentina, the Banco Central de la Republica Argentina hiked interest rates to 60% on 30 August after the peso fell by 15% following President Mauricio Macri's plea to the International Monetary Fund to speed up the issuance of its $50bn bailout package. The peso is down 46.3% against the US dollar year-to-date to end of August.

Elsewhere, investors remained bullish about the prospects of US equities despite the S&P 500 recording the longest bull-run in history on 22 August.

US large-cap ETFs witnessed inflows of €10.2bn with investors favouring the US due to President Donald Trump's continued threats of a full-blown trade war with China and Europe.

Global stock and small cap ETFs both saw inflows of €2.1bn and €2.7bn, respectively, while Asian large cap ETFs were in the red with outflows of €376m.

Investors continued to be concerned about the prospect for European large cap ETFs amid the uncertainty of what a Lega Nord-Five Star Movement coalition will bring. The asset class posted outflows of €894m.

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Across the fixed income space, all asset classes were in the black with developed investment grade bonds posting the strongest flows with €3bn inflows.

Developed government bond and developed high yield bond ETFs also both saw positive flows of €2.3bn and €913m, respectively.

TrackInsight's data covers both US and European-listed ETFs, which together comprise roughly 70% of the total market.

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• Topics
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• Emerging markets
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