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Emerging markets ETFs AUM up 59.1 per cent


Assets under management of emerging markets exchange-traded funds increased 59.1 per cent at the end of June 2009, according to a report by Barclays Global Investors.

Assets under management of emerging markets exchange-traded funds increased 59.1 per cent at the end of June 2009, according to a report by Barclays Global Investors.

At the end of June 2009 there were 272 ETFs providing exposure to emerging market benchmarks, assets of USD116.0nn, with 532 listings from 61 providers on 33 exchanges.

ETFs providing exposure to broad EM benchmarks are the most popular with 40.8 per cent of assets followed by ETFs covering Chinese country indices with 23.0 per cent of the assets.

Year-to-date, 35 new ETFs were launched around the world providing exposure to emerging market benchmarks.

iShares is the largest provider of emerging market ETFs in terms of both number of products, 50, and AUM of USD73.7bn, reflecting 63.5 per cent market share. Vanguard is second with one product and USD9.5bn, a 8.2 per cent market share. Lyxor Asset Management is third with 23 products and assets of USD4.2bn and a 4.0 per cent market share.

Emerging markets took the performance lead during the first half of 2009, with the Morgan Stanley Capital International (MSCI) Emerging Markets Index, a benchmark of equity market performance in 22 emerging economies, rising 34.3 per cent in US dollar terms, as global markets recovered from multi-year lows.

The MSCI World benchmark of equity performance in 23 developed market countries by contrast is up only 4.8 per cent year to date in US dollar terms. Among developed economies, MSCI Hong Kong posted a gain of 32.6 per cent, MSCI Singapore was up 29.5 per cent and MSCI Norway was up 26.1 per cent all in US dollar terms.

Signs of improving economic data encouraged investors to shift their focus to riskier assets. Many investors felt that emerging markets would lead a market rebound. The top three performing EM countries YTD in US dollar terms were MSCI India up 56.6 per cent, MSCI Brazil up 55.8 per cent and MSCI Indonesia up 55.2 per cent in US dollar terms.

The MSCI All Country World Index is made up of 87.9 per cent developed equities and 12.1 per cent emerging market equities, so investors running global equity portfolios against the index will form a natural allocation to emerging markets, the report says. According to data from EPFR Global net inflows to emerging market equity funds totalled USD26.5bn in the second quarter of 2009, surpassing the previous record in the fourth quarter of 2007.

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