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Investors swing to emerging markets

Samantha Hodge  |  07 Nov 2012Text size  Decrease  Increase  |  

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Samantha Hodge is a journalist with InvestorDaily, a Sterling publication.


Australian investors embraced emerging market bonds and equities in October, according to BlackRock Investment Institute's October Exchange-Traded Products (ETP) landscape report.

The uptick in risk appetite from investors has also contributed to year-to-date ETP flows of US$192.3 billion, which surpassed 2011's full-year total of US$173.4 billion. ETP flows in October were US$9.5 billion.

Within emerging market equities, China exposures took the lead followed by broad emerging market ETPs.

Central banks in China and Brazil have aggressively lowered interest rates in 2012.

An appetite for yield drove funds into investment-grade corporate ETPs, with the category recording US$3.3 billion in flows.

"Global trends identified in the report are being broadly echoed in Australia. Local ETPs are a fast-growing investment product category, having recorded more than 20 per cent growth in Australia so far this year," iShares Australia head Mark Oliver said.

"Like their overseas peers, Australian investors are using ETPs strategically as well as tactically in portfolios," he said.

ASX-listed ETPs that have experienced the strongest inflows are emerging and large-cap international equities, thematic Australian equity and cash.

Oliver explained that despite the recent closure of the US stockmarket as a result of Hurricane Sandy, ETFs offering exposure to underlying US equities markets continued to trade as normal on the ASX.

"As has been the case with other recent market events, the ETF structure has offered investors an efficient, dependable and effective trading tool through periods of crisis and disruption in investment markets," he said.