almost 3 years ago • 1 min
Investors are buying into emerging markets exchange traded funds (ETFs) at the fastest rate in more than two years as they seek alternatives to frothier American stocks.
The Vanguard FTSE Emerging Markets ETF, the largest ETF tracking EM stocks, received $1.3 billion in new money in the five days through Thursday, according to Bloomberg data. The popular SPDR S&P 500 ETF tracking US markets suffered $4.5 billion of outflows in the same period.
EM stocks are generally cheaper than those in developed markets – to account for the greater risk you take investing in these less stable economies. But EM valuations are currently a whole 29% cheaper than those in the US – compared to an average of 25% over the past 15 years.
If you think that gap may narrow further, consider following the crowd into emerging markets.
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