Passive investors are lapping up both equity and fixed income emerging markets exchange-traded products (ETPs), according to new data from global mega-manager BlackRock.
BlackRock’s most recent ‘Global ETP Landscape’ report shows emerging market debt and share products experienced record monthly flows in July of US$3.9 billion and US$8.2 billion respectively.
The news marks a sharp turnaround in sentiment for the emerging market sector which saw net outflows of US$26 billion over the 2015 calendar year.
By contrast, both emerging markets ETP sectors are on track for a chart-topping annual period with year-to-date equity product flows at US$16.7 billion while the fixed income result is similarly upbeat.
“Year-to-date flows to the category are $10.7bn already surpassing the full-year flow record for [emerging market] debt funds set in 2012 of $8.3bn, bolstered by a number of tailwinds,” the BlackRock report says.
The study says the somewhat bullish demand for emerging market debt ETPs has been underpinned by diminishing chances for US rate hikes and steadying commodity prices.
“Prospects for some EM economies have improved amid both healthier growth and balance sheets; China appears to be stabilizing and the threat of significant yuan devaluation has subsided,” BlackRock says.
The uptick in emerging market product flows occurred against a buoyant broader ETP universe, with US equity and high dividend funds along with corporate debt products also benefiting from the mood change.
“Global ETP flows surged to $55.2bn, the best month since December 2014, as investors sought yield and asset categories less affected by Brexit,” the BlackRock study says.
US equity ETPs saw the largest net flow over July with investors adding US$21 billion to the pool. Meanwhile, “pan-European” share ETPs experienced net outflows of US$6.7 billion during the monthly period as Chinese and German equity products bled US$1.5 billion and US$0.8 billion respectively.
During the seven months to end July this year the number of ETPs measured by BlackRock jumped from 5,865 to hit a new high of 6,084 as total funds under management in the sector rose by more than US$300 million to close out the period at US$3.3 trillion.