(Bloomberg) -- Turns out that ETFs tracking emerging markets have actually seen healthy inflows of new investment over the last few years. It's just hasn't come in the form we're used to. 

While recent focus has been squarely centered on big outflows from emerging market ETFs – $6 billion lost over the last three years to be exact – what has gone under the radar is that single country ETFs tracking emerging markets countries have actually seen $7 billion of inflows.

This indicates that at least some investors are breaking up their EM exposure into more targeted pieces as they – along with folks like Mohamed El-Erian – question the logic of grouping together disparate countries such as India, Russia, Mexico and Poland, into one big catch-all pile.

That trend stands in contrast to international developed markets where regional ETFs are still the preferred choice over single country ETFs. For example, regional European ETFs have taken in $42 billion over the last three years, while single country European ETFs have taken in just $8 billion. 

Josh Brown, chief executive officer of Ritholtz Wealth Management, suggests the developed world is less disparate compared to EM:

"There is no difference between Portugal and Spain. Portugal is like diet Spain. But, there’s a huge difference between Russia and India. One is a commodity exporter, one is an importer. Their demographic trends are racing in different directions. This is why I bet we smash the BRIC idea completely. The whole idea of EM/DM has very little to do with each other. We only own them in a packager because it is easy. But it is probably not the best way to invest."

Recebt returns support this as well. The four BRIC countries –Brazil, Russia, India and China  alone – show nearly 100 percentage points of return difference over the last three years. India is up 43% while Brazil is down 52%, for example. That is about five times more than the difference in return among the 10 largest countries in the Vanguard FTSE Europe ETF.

The wide-ranging characteristics and returns of developing countries are why some question whether 'EM' should be an asset class at all. The table below shows exactly where the money has been going during the past three years as well as the very different returns for each country.  

As expected, flows mostly followed returns.

Such was the case with India, which got a big boost from the election of a new pro-business prime minister, Narendra Modi. On the flip side, investors yanked cash out of Brazil as the market slumped 52%. Some countries – such as Russia – bucked the trend as investors tried to call a bottom. All in all, $7 billion in new cash flowed into EM through single country ETFs during a time when all the headlines spoke of the 'massive outflows' from emerging markets ETFs.

Of course, the downside to breaking up EM is increased volatility and the possibility of picking 'losers' with no 'winners' to offset them. However, these numbers suggest investors may be willing to stomach that risk in exchange for the ability to assemble their own emerging exposure, piece by piece.

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.