Emerging markets equities investing continues to be a top theme. Following a standout year in 2025, investors have flooded ex-U.S. equities with dollars, setting records for inflows in January. Emerging markets continue to pick up a sizable chunk of those flows, with emerging markets equities ETF AVEM adding $1 billion in flows in just the last week.
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Why, then, are these equities picking up such significant flows? Multi-year and near-term tailwinds are boosting the category’s appeal. For one, many investors appear to be pushing their assets into tech firms offering a degree of diversification away from the big U.S. names.
SK Hynix (000660), a key South Korean tech firm, has returned some 50.4% YTD, for example. The chip manufacturer benefits from the ravenous global demand for its products, of course, but also can help diversify portfolios heavily invested in AI hyperscalers.
Of course, strong emerging markets equities performance has not been limited to the tech-dominated East Asian markets. Commodities helped lift many African equities to a strong performance last year, while trends continue to be positive in South American markets like Brazil and Peru.
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A declining dollar may be helping to drive investor dollars abroad. Lower valuations in foreign markets, too, could appeal when compared to expensive U.S. stocks. Whether those dollars are chasing last year’s performance too much or not, opportunities continue for the category to play a strong satellite role.
That’s where ETFs like AVEM can appeal. The Emerging Markets Equity ETF (AVEM ), charges a 33 basis point (bps) fee. The fund actively invests in emerging markets stocks of all capitalization. Where passive equities ETFs simply look to the largest market cap names, AVEM offers a deeper, more flexible focus.
Together, that has helped the fund return 49.7% over the last twelve months per ETF Database data. What’s more, it has added a robust $1 billion in net inflows in just the last week. Overall, its AUM has now exceeded $20 billion in total – the second ETF from Avantis Investors to reach that marker. For those wanting emerging markets equities options as flows continue, AVEM can appeal.
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