Billions flood active ETFs in hunt for cheap EM stocks

Apr 1, 2024 10:22 am | News

New York: As investors scour the globe for under-valued stocks, one increasingly popular destination is actively managed exchange-traded funds that focus on emerging markets. In the $348 billion market for ETFs that invest in developing-nation assets, the holdings of only about 5% of funds are actively managed – rather than pinned directly to an underlying index, according to data compiled by Bloomberg. But those actively managed funds have lured in more than a third of new cash that’s flowed into the asset class over the past year and more than 50% in the past month.

“If ever there was a compelling case for a more systematic approach to active management, it’s now,” said Donald Calcagni, chief investment officer of Mercer Advisors Investment Management and a buyer of active emerging-market ETFs. “Look at all the dislocations that are happening globally, at valuations, at how concentrated markets have become.”

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