While ETFs have risen in popularity as an easy way to access hard-to-reach corners of financial markets, investors in passive vehicles are contending with the drawbacks of a fixed strategy. The rotation to active funds is evidence that everyone — from mom-and-pop traders to professional asset managers — are starting to realize the scope of Beijing’s struggle to deliver on its promised post-Covid growth.
Traders in the US$325 billion industry for emerging-market exchange-traded funds are shifting cash toward strategies that focus on brighter spots in the developing world as China’s economy stumbles.
Actively managed ETFs — especially those with exposure to India’s world-beating growth and Latin American stocks — have lured nearly half a billion dollars over the past month, according to data compiled by Bloomberg on US-based funds. At the same time, investors have yanked US$3.5 billion out of passive, China-heavy strategies.
