Investors have yanked cash from emerging market ETFs ahead of central bank decisions, although the region has seen a little relief around the Trump-Kim summit.
US interest rates
US-listed ETFs have gathered more than $28 billion in September – a new annual high – despite the Federal Reserve hinting at interest rate hikes – a move intended to return to normal monetary policy and ward off another Great Depression.
Bond ETFs are off to a great start in 2017, and remain a crucial part of any portfolio. Investors are not scared off by interest rate hikes, even with several more planned for the rest of the year.
ETFs saw record-breaking inflows over the first two months of the year, but cracks are beginning to show as investors start to worry about the UK’s Brexit negotiations and US President Donald Trump’s ability to implement his reforms.
Inflows into emerging market debt ETFs picked up sharply in July amid global market volatility, after Britain voted to leave the European Union and the US Federal Reserve continued to hold interest rates in its latest monthly meeting.
The latest figures reflect investors’ ongoing concerns over the uncertainty looming over the UK and Europe in the run-up to the EU referendum and their changing expectations for a rate hike by the US Federal Reserve.