Growing Optimism Among Investors in Emerging Markets
Emerging Global Advisors (EGA) today announced the results of its latest Emerging Markets (EM) Investor Sentiment Survey, a quarterly poll of asset managers and financial advisors focusing on their sentiment and equity allocations to emerging markets. The EGA EM Investor Sentiment score increased 28% from 538 in the first quarter of 2016 to 687 in the second quarter of 2016. Scores range from 0 (most negative) to 1,000 (most positive).
With emerging markets leading other equity regions in the first half of 20161, investors are showing growing interest in increasing portfolio allocations to EM. Key findings:
“Positive” was the most common answer (47%) for respondents’ outlook for EM equities over the next 12 months, followed by “Neutral” (43%). This is a change from 1Q2016 when “Neutral” was the most common answer.
49% expect to stay the course with their EM equity allocation in the next 12 months, while 46% expect to increase their EM equity allocation, consistent with last quarter.
78% of respondents say their current EM allocation is about the same or higher than 12 months ago, while only 22% say it is lower (down from last 1Q2016).
According to respondents, generating alpha and accessing a specialized exposure are viewed as the most important attributes when selecting a smart beta ETF.
Across all asset classes, nearly half (49%) of investors have replaced or expect to replace an active manager with a smart beta ETF.
“The survey empirically reveals growing optimism among EM investors and a willingness to utilize strategic [smart] beta portfolios to capitalize on EM’s key growth drivers,” said Marc Zeitoun, Chief Product and Marketing Officer at Emerging Global Advisors. “These results validate what we had described in our Strategic Beta In Emerging Markets thought piece, published earlier this year. By implementing a rules-based process that reflects the systemization of alpha drivers, strategic beta strategies can cost-efficiently add alpha.”
About the EGA EM Investor Sentiment Survey
A total of 83 asset managers and financial advisors, with over 72% managing more than $100 million in assets, participated in the digital survey between June 1 – July 7, 2016. To download the report, visit here.
About Emerging Global Advisors
Emerging Global Advisors (EGA) is a leading provider of strategic beta portfolios in emerging markets and we employ a disciplined, rules-based investment process rooted in research and portfolio strategy. Our investment strategies, including our EGShares suite of ETFs, are designed to help investors generate alpha within their emerging and frontier market allocations. We offer core equity, thematic and equity income emerging and frontier market exposures.
1Source: Bloomberg, MSCI, EGA. MSCI Emerging Markets Index was up 6.41% from January 1 – June 30, 2016.
Carefully consider the Fund’s investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the Fund’s prospectus, which may be obtained by calling + 1 888 800 4347 or by visiting the Fund’s website egshares.com to view or download a prospectus. Read the prospectus carefully before investing. Investing involves risk, including possible loss of principal.
Emerging market investments involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, from economic or political instability in other nations or increased volatility and lower trading volume. This Fund will concentrate its investments in issuers of one or more particular industries to the same extent that its Underlying Index is so concentrated and to the extent permitted by applicable regulatory guidance. Concentration risk results from maintaining exposure to issuers conducting business in a specific industry. Small-cap and mid-cap companies generally will have greater volatility in price than the stocks of large companies due to limited product lines or resources or a dependency upon a particular market niche. One cannot invest directly in an index.
ETF shares are bought and sold at market price (not NAV) and are not individually redeemed from the Fund.
MSCI Emerging Markets Index is an index that is designed to measure equity market performance in global emerging markets. One cannot invest directly in an index.
Marc Zeitoun is a registered representative of ALPS Distributors, Inc. EGA and EGShares Funds are distributed by ALPS Distributors, Inc. Emerging Global Advisors acts as the investment advisor to the Fund. ALPS and Emerging Global Advisors are unaffiliated entities.