Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013
Chris Mellor, Source

22391

A quarter of institutional investors to capture emerging market rebound through index tracking

RELATED TOPICS​

A quarter (26 per cent) of institutional investors say they will capture the rebound in emerging markets through index tracking/passive investments, according to research commissioned by European exchange-traded fund (ETF) provider Source.

A similar number (24 per cent) said they were unsure whether active or passive strategies were better while half (50 per cent) said active remained their preferred choice.
 
Source believes the findings underline how significant passive investments and ETFs have now become in the emerging markets sector.
 
The research also found that approximately 60 per cent of institutional investors think that emerging market equities will outperform developed market equities over the next 12 months; just 5 per cent did not, with 32 per cent neutral on prospects for the asset class.
 
Separate analysis of Morningstar data by Source shows that over 10 years, 63 per cent of active fund managers underperformed the MSCI Emerging Markets index.
 
Chris Mellor (pictured), executive director, equity product management at Source, says: “After five difficult years, it is clear that emerging market equities have turned the corner. EM equities look cheap both historically and versus other regions. We are also positive on EM bonds: when you look at debt levels across developed and emerging markets, the countries in the strongest positions are markets such as Mexico, Russia and Indonesia. While demographics and low debt levels imply economic stability, EM government debt is yielding around 6 per cent.
 
“European investors have already put more than USD3 billion into MSCI Emerging Markets ETFs this year and another USD2.5 billion into EM local bond ETFs. We expect further continued inflows into EM assets as regional fundamentals strengthen.”
 
To help its clients better access emerging markets, Source has lowered the fees on its MSCI Emerging Market UCITS ETF to 0.29 per cent, making it one of the most competitive in the market. In terms of the fixed income sector, the PIMCO Source EM Advantage ETF is one of the top-performing EM local bond ETFs this year, with a yield to maturity of 6.8 per cent.
 
Mellor says: “We strongly believe that passive makes sense for EM. Our MSCI EM ETF gives investors index performance with a low tracking error at a fraction of the cost of an active fund. Our PIMCO Source EM Advantage ETF has delivered good performance at a time when increasing numbers of investors are looking for yield.”

Latest News

Irish domiciled funds surpassed EUR4.3 trillion AuM (Assets under Management) at end-March 2024, a 15..
New analysis by London-based Nickel Digital Asset Management reveals 38 listed companies with a combined..
Bloomberg has announced that for the first time, its proprietary Bloomberg Second Measure (BSM) transaction..

Related Articles

Global ESG Investing
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of climate change and ESG factors in state policymaking...
On May 15 Florida’s Republican Governor Ron DeSantis signed legislation that furthers his ongoing campaign to oppose the role of..
Trends
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100 million deals announced this month alone...
The trend to buyout among the UK’s smaller defined benefit (DB) schemes continues with a slew of new sub GBP100..
Different flavours
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led, multi-boutique global asset manager with over USD20 billion under management, recently undertook a survey with 204 UK investment professionals, seeking insights into their perceptions and attitudes towards boutique asset managers...
In what is believed to be the first survey of its kind in the UK market, Nedgroup Investments, the investment-led,..
UK map
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be worth billions of pounds in the coming years...
UK local government pension schemes (LGPS) are leading the charge on investment in private markets issuing tenders set to be..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by