Exchange-traded funds reaped the benefits last year of a large investor migration into risky emerging markets and developing countries, CBS MarketWatch reports.
Latin American, Eastern Europe and Asian markets thrived, as did ETFs investing in those regions. Emerging markets funds grew last year by 24.2% with a boost from energy-rich countries like Russia. The weak U.S. dollar provided additional aid to most emerging markets regions.
Latin America funds outperformed other developing regions last year by surging ahead 38.4% and generating 21.3% average returns for the past three years.
U.S. investors poured $51.2 billion into international stock funds in 2004, more than any other year, comprising nearly half of the $116.8 billion absorbed by domestic stock funds during the same period.
Investors are increasingly looking to ETFs as a low-cost and flexible gateway into diversified emerging markets sectors. For example, Barclays Global Investors' iShares MSCI Emerging Markets Index, now the fourth-largest emerging markets fund, received $2.3 billion of fresh cash last year, raising its assets by 225% from the previous year, according to TrimTabs.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.