iShares Emerging Markets ETF Sees $26B Inflows as Index Rallies 27%
U.S. investors have poured $26 billion into emerging markets this year, and the Dow Jones EM Index is up 27.36% over the past 12 months versus the S&P 500’s 16% gain. A 35% YTD jump in the VIX and UBS’s neutral stance on U.S. stocks are boosting demand for ETFs like EEM.
1. Fund Flows to Emerging Markets
U.S. equity products have experienced $75 billion of outflows over the past six months, including $52 billion this year, while emerging-market ETFs have attracted $26 billion in net inflows year-to-date. EEM has captured significant share of these flows as investors rotate away from domestic stocks.
2. Relative Performance vs U.S. Markets
The Dow Jones Emerging Markets Index has gained 27.36% over the last 12 months, outpacing the S&P 500’s 16% advance, with EM assets up 8.29% YTD versus 0.93% for U.S. large caps. EEM, tracking the MSCI Emerging Markets Index, has mirrored these returns, reinforcing its appeal.
3. Volatility and Market Drivers
Volatility has surged, with the VIX climbing 35% YTD, while the U.S. Dollar Index has declined 8.26% over the past year, enhancing emerging-market asset returns. UBS’s neutral rating on U.S. equities, plus geopolitical and debt concerns, are driving further diversification into ETFs like EEM.