U.S. equities have been somewhat surprising so far this year, with a birfucated tech market lifting up the overall stock market behind some strong performers. That may not be able to last, however, especially with a looming recession and a stubborn attrition fight between inflation and interest rates. Foreign equities, however, have a much more robust argument in their favor in 2023 that recently helped boost the rising emerging markets ETF, the Avantis Emerging Markets Equity ETF (AVEM ), to $3 billion in AUM.
AVEM’s new AUM total comes just a few months after hitting its three-year milestone as an ETF, suggesting that investors and advisors have awarded the strategy with flows in part due to its new stature as an “experienced” ETF. What’s more, the most recent flows for the strategy aren’t just due to their flows, but also a result of price influence, according to VettaFi.
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Emerging markets equities have benefited notably from China’s reopening. Having already done the hard work of fighting inflation last year, emerging markets have reached a new level, thanks to China’s economic engine roaring back to life with reinvigorated bi-directional tourism and its voracious demand for commodities.
Should emerging markets equities hit a blip, that may be tied to China, but the nation’s aim to return to 5% or more yearly growth and the prospect of government stimulus to support that goal should keep EM equities in the cards.
Taken together, they’ve boosted AVEM and have also been an intriguing area as a whole, with both overall and value orientations offering some notable YTD returns in the space. AVEM gives the overall view, while the Avantis Emerging Markets Value ETF (AVES ), which is actively managed and has some distance to go before catching AVEM’s $3 billion, currently sits at $259 million in AUM.
AVEM charges a 33 basis point fee and has added $251 million over the last month, according to VettaFi, and has returned 4.3% YTD, outperforming its ETF Database category average and its FactSet segment average. For those investors interested in a rising emerging markets ETF, AVEM may be one to consider entering the second half of 2023.
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