Flows into Amundi ETF’s emerging market equity exchange traded funds accounted for over 40% of all European emerging market equity ETF flows last month. According to data from the provider it saw €560m of net inflows into its emerging equity ETFs, compared to total net flows of €1.4bn into the sector.
Fannie Wurtz, Managing Director at Amundi ETF, Indexing & Smart Beta.
Emerging equity markets outperformed developed markets in the first three months of 2016, with the Amundi MSCI Emerging Markets UCITS ETF (AUEM) gaining 20.6% between its lowest point this year on 20 January 2016 and 1 April 2016. The economic fundamentals of emerging markets may still look shaky and wide divergences are noted between regions: emerging markets in Europe and Latin America turned in slightly negative growth rates during 2015 but those in Asia expanded by almost 6% on average.
However, Amundi states that cyclical recoveries often begin with tactical rallies and this latest rally has been driven by three powerful catalysts: the rebound in oil prices, the halt in the dollar’s rise, and the renewed lustre of the “undervalued stock” theme.
Amundi also notes that not all emerging market countries were negatively affected by recent falls in commodity prices. For net commodity-importing countries, particularly Asian ones, lower commodity prices have helped offset the impact of the Chinese slowdown to such an extent that most of these countries’ growth in 2015 remained unchanged from 2014. Central Europe benefited from both lower commodity prices and a strong German economy.
In a recent research paper, Amundi highlights four key economic fundamentals that may continue to drive returns in emerging market equities: China’s economy will have to continue to stabilise, given its influence over other emerging economies; oil and industrial commodities will need to continue their rallies; the renminbi must remain stable; and the US dollar must not rise too much, even when the Fed raises interest rates.
Fannie Wurtz, Managing Director at Amundi ETF, Indexing & Smart Beta, commented: “We believe emerging markets are the challengers for the coming weeks, and investors are searching for the right tools to reconsider them. ETFs are definitively a cost-efficient solution, and our capacity to offer the cheapest global and regional emerging market equity range with good liquidity is decisive to support clients in their shift back to emerging markets.”
Amundi provides a range of emerging market ETFs covering global and regional exposures that trade on the London Stock Exchange in US dollars or British pounds. Each ETF contains net fees of 0.20%. These include:
Amundi MSCI Emerging Markets UCITS ETF (AUEM)
Amundi MSCI EM Asia UCITS ETF (AASU)
Amundi MSCI EM Latin America UCITS ETF (ALAU)
Amundi MSCI Eastern Europe Ex Russia UCITS ETF (CE9U)