The Growth of ETFs in Emerging Markets

Abstract

The article looks at how investors have historically used Exchange Traded Funds (ETFs) to gain exposure to Emerging Markets. However, in recent years we have seen a new development: ETFs are being listed on Emerging Market exchanges. Today, ETFs are listed in Latin American and Asian bourses, most notably in Mexico, Brazil, India, China, and Korea, while South Africa is leading the way on its continent.

Some of these ETFs also have moved beyond just giving access to domestic securities, with many products now offering international exposure. The trend to invest both in and out of Emerging Markets via ETFs is clearly set to grow further. So what are the factors driving ETF growth on Emerging Market exchanges? How is the relationship of Emerging Markets with this exciting products class changing?

The article references data from ETFGI, the independent research and consultancy firm, confirms that the adoption of ETFs in EMs has been strong, especially in relation to Developed Markets, albeit from a smaller base, and quotes Deborah Fuhr, its managing partner.