Emerging-market ETFs in U.S. raked in money before central bank guidance
NEW YORK, Oct 23 (Reuters) – Investors pumped hundreds of millions in new dollars into U.S.-listed exchange-traded funds tracking emerging markets ahead of news suggesting central bankers will keep monetary policy loose to stimulate global economic growth.
Fund companies recorded $710 million in net emerging-market fund inflows on Thursday alone, according to FactSet Research Systems Inc, with one such product posting its largest single-day haul ever.
The strong day advanced a three-week long period of inflows for the emerging-market funds, which track stocks in China, South Korea, India and a group of other developing countries. The figure doesn’t include a group of so-called leveraged funds that traders use to amplify bets on index price moves.
The fund buying comes despite concerns that global economic growth is slowing, particularly in China. China’s central bank cut interest rates on Friday for the sixth time in less than a year. That rate cut came minutes after Premier Li Keqiang was quoted on state radio as saying that China will make "reasonable use" of rate and RRR cuts to keep its economy growing at a reasonable pace.
That move followed remarks Thursday by European Central Bank President Mario Draghi, who raised the possibility of further easing measures to counter weak inflation in the euro zone.
Among the funds seeing strong flows was the iShares Core MSCI Emerging Markets ETF. Its $300.9 million intake, recorded Thursday, was the largest ever single-day inflow for the three-year-old fund, according to Melissa Garville, a spokeswoman for the fund’s overseer, BlackRock Inc. The fund manages $8.2 billion in total.
The $23 billion iShares MSCI Emerging Markets ETF took in $336 million for the day, its strongest flows this month.
The MSCI Emerging Markets benchmark tracked by tens of billions in ETF assets overall, including EEM, shed 17.9 percent of its value for the year through its low point for the year, on Aug. 24, but the index has rebounded by 11.6 percent since then.
Strong flows into the emerging-market funds have accelerated this month. On Thursday, the research service Lipper said emerging-market stock funds had recorded three straight weeks of new assets for a period that ended Wednesday. Over those three weeks, the inflows totaled $1.6 billion, Lipper said.
Fund investors seem to be taking a rosier short-term view on markets as high-yielding junk bond funds and stock funds also reported netting new money.