Emerging market corporate bonds have seen a performance boost over the last month following a sell-off in other developing economy assets.
emerging market ETFs
A strengthening US dollar has contributed to a reversal of fortunes for emerging market equity ETFs after a strong run, with Turkey and Latin America among those hit the hardest by the recent sell-off.
Investor sentiment towards various geographical regions has been driving their investment decisions so far this year, with some of the best performing equity markets failing to gain the support they deserve, while underperforming developed equities have taken in the bulk of the money.
While US-based investors have been fleeing equity ETFs throughout February, especially in their home market, European buyers have remained resilient despite the volatility. However, overall equity ETFs have seen over €4bn of outflows during the month, as a general risk off mood has spread across markets.
Emerging market equity ETFs have amassed close to $50 billion year to date despite geopolitical turmoil brewing in the Middle East and anticipated interest rate hikes from the US Federal Reserve.
US-based ETF investors are withdrawing en masse from currency-hedged international funds, despite advice to the contrary. The three largest currency-hedged ETFs in the US have seen combined outflows of around $3.5 billion so far this year as the US dollar has declined more than 9% against rival currencies.