Institutions overwhelmingly foresee a resurgence in emerging markets over the next 12 months, and over a quarter aim to tap into the rebound via passive investment vehicles, figures indicate.
The data, issued by exchange-traded fund (ETF) provider Source, showed 60% of institutional investors believed emerging market equities would outperform developed market equities over the year ahead. However, while 26% said they would use index funds or ETFs to invest in the market, 50% intended to use active funds, and 24% were uncertain whether active or passive strategies were the optimal means.
Dr. Chris Mellor, executive director of equity product management at Source, said that after five “difficult” years, emerging market equities have “turned the corner”. He added that the asset class looks cheap, both in historical and relative terms.
Morningstar data indicates European investors have already pumped over $3 billion (€2.75 billion) into emerging market ETFs this year, and another $2.5 billion into emerging market local bond ETFs.
Source interviewed 112 institutional investors for the survey.
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