Posted inAnalysisEmerging MarketsEquitiesChina

Passive investors get back into EM equities

According to the group’s ETP Landscape publication, emerging market equity products saw $2.9bn in inflows during the month, as momentum for EM funds, particularly those with exposure to China and India picked up.

As reasons for the growth in momentum, Blackrock cited the cautious tone of the Federal Reserve in March and April, hope for economic reforms in China and India and relatively attractive valuations versus developed markets.

According to the firm, the Fed’s tone “suggested a later start to interest rate increases as well as a slower pace, both of which are positives for EM equities”.

But, while EM equity ETFs saw strong inflows, developed market equity trackers continued to draw in significant flows as well, reporting inflows of $10.4bn over the month, largely on the back of global funds that benefited from demand for diversified non-US exposure.

Overall, the group said: “Global ETP flows moderated to $6.5bn in April. Investors grappled with mixed data on global economic growth following the March Fed meeting, resulting in stronger fixed income flows at the expense of equity categories with stretched valuations. However, year-to-date flows remain ahead of last year’s record pace.”

Part of the Mark Allen Group.