Stunning Inflows Continue For Emerging Markets Funds Into Quarter-End

While ETF trading has been dominated by quarter-end portfolio rebalancing and what some may call “window dressing,” we still see net inflows in U.S. Large Caps via SPY (SPDR S&P 500, Expense Ratio 0.09%) and QQQ (PowerShares QQQ, Expense Ratio 0.20%).

Emerging Markets are catching an noticeable bid lately as well, with IEMG (iShares Core MSCI Emerging Markets) and VWO (Vanguard FTSE Emerging Markets) both reeling in over $1.1 billion and $350 million in new assets respectively via inflows.

It is worth pointing out once more that IEMG has put together a stunning 2017 thus far in terms of asset growth, pulling in north of $6.5 billion in just the first three months of this year, building its asset base up to the $26.9 billion level. Since its inception in November of 2012 it has outperformed its “cousin” ETF, the larger EEM (iShares MSCI Emerging Markets, Expense Ratio 0.67%, $47.2 billion in AUM) by nearly 400 basis points.

IEMG was launched in late 2012 (EEM debuted in 2003) as a more “optimized” way to access a broad Emerging Markets index such as the MSCI EM, and we have pointed out in the past in these pieces that the fund contains one thousand eight hundred ninety-four individual equities with an Emerging Markets focus, as compared to EEM’s eight hundred forty-four names.

There are also differences in top end exposures in terms of company and percentage weighting allocations, as the top five weightings in EEM are as follows: 1) Samsung Electronics Co Ltd. (4.04%), 2) Tencent Holdings Ltd (3.59%), 3) Taiwan Semiconductor Manufacturing Co Ltd. (3.50%), 4) Alibaba Group Holding Ltd ADR (BABA, 2.73%), and 5) China Mobile Ltd. (1.67%). IEMG on the other hand appears as follows: 1) Samsung Electronics Co Ltd. (3.51%), 2) Tencent Holdings Ltd. (3.12%), 3) Taiwan Semiconductor Manufacturing Co Ltd (3.03%), 4) BABA (2.37%), and 5) Naspers Ltd. Class N (1.45%).

EEM also has a significantly larger allocation to Large Caps (87%) as compared to IEMG’s 77%, and this may be partially responsible for the outperformance that IEMG has displayed since inception (with larger weightings to mid and smaller-cap companies).

The iShares Core MSCI Emerging Markets (NYSE:IEMG) was trading at $48.28 per share on Thursday morning, down $0.09 (-0.19%). Year-to-date, IEMG has gained 13.73%, versus a 5.73% rise in the benchmark S&P 500 index during the same period.

IEMG currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #3 of 77 ETFs in the Emerging Markets Equities ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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