Since the economic slowdown in 2008, investors have slowly started to shed their domestic fund bias and started to search the world for greener pastures. As one of the most diverse markets, Asia has become a haven for both risk adverse and long term investors looking for firms in developed economies, and a home for the bold and calculated emerging market investor looking for strong returns. As a number of ETFs represent both strategies, it is no surprise that sometimes funds eat into each others’ inflows.
With over 25 Asia Pacific Equity ETFs on the market, the majority focus on a single country at a time; Australia, China, India or Japan to name a few. ETFs that offer a broader hold on the Asian market can be a powerful play for investors looking for total market exposure
Meet the Competitors
VPL and GMF separate themselves by being the largest multi-country funds in the space, boasting over $2 billion and $500 million in total assets under management, respectively. VPL consists of over 800 firms, with a strong tilt towards financials and industrial firms located in Japan, Australia, South Korea and New Zealand. GMF has the majority of its holdings in China, Taiwan and India, with more focus in technology and energy [try our Free ETF Head-To-Head Comparison Tool].
It does not take long to figure out that the inflows of GMF are more sporadic than that of VPL. The State Street product only bested its Vanguard competitor in 2009 and 2010 when emerging markets were seen as a safe haven for cash and VPL saw an outflow of $132 million compared to GMF’s inflow of over $338 million. There are pros and cons that come with investing internationally, including currency risks, liquidity and industry concentration, and these are amplified in emerging markets. However, GMF has proven that when markets in developed nations are down, there is a rush to any fund offering a return [see also 7 Answers To The Critical Questions On Investors' Minds].
Follow me on Twitter @lynpaintzall