Emerging market ETFs see outflows after four weeks ahead of US elections

Investors pulled money out of emerging market (EM) exchange-traded funds (ETFs) last week, snapping a four-week streak of inflows as the US election neared and rising coronavirus infections pushed some European autho­rities to reinstate lockdowns.

US-listed EM ETFs that invest across developing nations, as well as those that target specific countries lost $103 million in the week ended October 30, ending a month long rally that brought $3.09 billion in inflows, according to the Bloomberg data. The year’s outflows now reach $12.8 billion. The withdrawals were concentrated in developing-nation bond funds, which fell by $317.2 million. The $17.2 billion iShares J.P. Morgan USD Emerging Markets Bond ETF, known as EMB, suffered the largest withdrawals as money managers pulled $341 million last week, the most in a month.

Risk aversion was evident outside ETFs, too. MSCI’s iindices of emerging-market stocks and currencies both fell by the most in more than a month last week as infections rose and investors weighed the economic impact of renewed lockdowns.