Latest news with #PatturajaMurugaboopathy
Yahoo
23-05-2025
- Business
- Yahoo
Emerging market equity funds lure investors fleeing overvalued U.S. assets
By Patturaja Murugaboopathy and Johann M Cherian (Reuters) -Emerging market equity funds are leading the global performance this year, bolstered by attractive valuations, years of under-positioning by investors and an easing of economic pressures after U.S. President Donald Trump's pause on tariffs. According to data compiled by LSEG, funds tracking equities in Latin America and emerging Europe have each gained around 24% so far this year, while broader emerging market equity funds are up 9.3%. Notably, equity funds focused on Morocco, Colombia, Greece, Brazil, and Portugal have each returned more than 30% this year. In comparison, U.S.-focused equity funds have returned just 0.17%, and global equity funds are up 6.8%. The outperformance of emerging markets marks a reversal after their years of lagging developed markets, during which U.S. equities, driven by the AI-led tech rally, delivered stellar index gains. This year, however, investors have been selling U.S. assets as worries over possible recession, fiscal instability and Trump's erratic policies shake their faith in the dollar. LSEG Lipper data showed dedicated EM equity funds have attracted $10.6 billion in inflows in the first five months of the year, a 43% increase over the same period last year. Malcolm Dorson, emerging markets senior portfolio manager at GlobalX, attributed this to how under-owned emerging market equities are. U.S. investors allocate just 3–5% to emerging markets, well below the 10.5% weighting in the MSCI Global Index and far short of their roughly 25% share of global market capitalisation, he said. "Allocators are dangerously short a deeply discounted and fast-growing asset class," he said. Analysts also highlight improving fundamentals. Latin American countries are largely insulated from tariffs, given their trade deficits with the U.S., while Asian economies are pivoting toward domestic consumption. Further, upgraded its rating on emerging market stocks to "overweight" from "neutral" earlier this week. It said it expects all central banks across developing economies, excluding Brazil, to ease monetary policy, which could increase economic activity and the attractiveness of equity markets. Gains in tech stocks have buoyed Chinese and Hong Kong equities, drawing renewed interest from foreign investors seeking to invest in artificial intelligence and other low-cost tech firms such as DeepSeek. There are opportunities in Mexico and Brazil, which have remained resilient despite trade tensions, according to Alison Shimada, portfolio manager at Allspring Global Investments. "The China consumer story is especially interesting right now," she said. "Beijing is very focused on stimulating the consumer economy. India may be overbought, but there are pockets of opportunity such as power companies and non-bank financials." At the end of last month, the MSCI Emerging Markets Index was trading at a forward 12-month price-to-earnings ratio (P/E) of 11.96, just below its 10-year average of 12.1. In contrast, the MSCI USA and MSCI World indexes were trading at 20.5 and 18.1, well above their 10-year averages of 18.8 and 16.9, respectively. (Reporting By Patturaja Murugaboopathy in Bengaluru and Johann M Cherian in Singapore; Editing by Janane Venkatraman) Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
Emerging market equity funds lure investors fleeing overvalued U.S. assets
By Patturaja Murugaboopathy and Johann M Cherian (Reuters) -Emerging market equity funds are leading the global performance this year, bolstered by attractive valuations, years of under-positioning by investors and an easing of economic pressures after U.S. President Donald Trump's pause on tariffs. According to data compiled by LSEG, funds tracking equities in Latin America and emerging Europe have each gained around 24% so far this year, while broader emerging market equity funds are up 9.3%. Notably, equity funds focused on Morocco, Colombia, Greece, Brazil, and Portugal have each returned more than 30% this year. In comparison, U.S.-focused equity funds have returned just 0.17%, and global equity funds are up 6.8%. The outperformance of emerging markets marks a reversal after their years of lagging developed markets, during which U.S. equities, driven by the AI-led tech rally, delivered stellar index gains. This year, however, investors have been selling U.S. assets as worries over possible recession, fiscal instability and Trump's erratic policies shake their faith in the dollar. LSEG Lipper data showed dedicated EM equity funds have attracted $10.6 billion in inflows in the first five months of the year, a 43% increase over the same period last year. Malcolm Dorson, emerging markets senior portfolio manager at GlobalX, attributed this to how under-owned emerging market equities are. U.S. investors allocate just 3–5% to emerging markets, well below the 10.5% weighting in the MSCI Global Index and far short of their roughly 25% share of global market capitalisation, he said. "Allocators are dangerously short a deeply discounted and fast-growing asset class," he said. Analysts also highlight improving fundamentals. Latin American countries are largely insulated from tariffs, given their trade deficits with the U.S., while Asian economies are pivoting toward domestic consumption. Further, upgraded its rating on emerging market stocks to "overweight" from "neutral" earlier this week. It said it expects all central banks across developing economies, excluding Brazil, to ease monetary policy, which could increase economic activity and the attractiveness of equity markets. Gains in tech stocks have buoyed Chinese and Hong Kong equities, drawing renewed interest from foreign investors seeking to invest in artificial intelligence and other low-cost tech firms such as DeepSeek. There are opportunities in Mexico and Brazil, which have remained resilient despite trade tensions, according to Alison Shimada, portfolio manager at Allspring Global Investments. "The China consumer story is especially interesting right now," she said. "Beijing is very focused on stimulating the consumer economy. India may be overbought, but there are pockets of opportunity such as power companies and non-bank financials." At the end of last month, the MSCI Emerging Markets Index was trading at a forward 12-month price-to-earnings ratio (P/E) of 11.96, just below its 10-year average of 12.1. In contrast, the MSCI USA and MSCI World indexes were trading at 20.5 and 18.1, well above their 10-year averages of 18.8 and 16.9, respectively. (Reporting By Patturaja Murugaboopathy in Bengaluru and Johann M Cherian in Singapore; Editing by Janane Venkatraman)
Reuters
02-05-2025
- Business
- Reuters
Japanese investors raise foreign stock holdings for sixth week on easing trade tensions
May 2 (Reuters) - Japanese investors raised their foreign stock holdings for a sixth straight week as their sustained appetite for overseas equities was further bolstered by signs that the U.S. and China were willing to ease trade tensions. The local investors also viewed last week's stronger yen as an opportunity to enhance their overseas asset positions. The yen reached a seven-month high of 139.86 per dollar before partially reversing its gains. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. Japanese investors allocated a net 133.8 billion yen ($920.85 million) to foreign equities last week, marking their sixth consecutive week of net purchases, according to data from Japan's Ministry of Finance. They also acquired a net 435.2 billion yen in long-term foreign bonds. The MSCI World Index (.MIWD00000PUS), opens new tab climbed to a five-week high of 840.47 on Thursday, supported by progress in U.S.-China tariff negotiations and strong earnings reports from major tech firms. Meanwhile, Japanese equities attracted a net 278.3 billion yen in foreign inflows, the smallest weekly cross-border investment in the past four weeks. Foreign interest in Japanese bonds also cooled, with inflows into long-term Japanese bonds falling to 60 billion yen last week, down sharply from approximately 1 trillion yen in net purchases the previous week. ($1 = 145.3000 yen) Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Janane Venkatraman Our Standards: The Thomson Reuters Trust Principles., opens new tab
Yahoo
24-04-2025
- Business
- Yahoo
Leveraged equity ETFs popular as investors bet on market recovery
By Patturaja Murugaboopathy and Gaurav Dogra (Reuters) -Leveraged equity exchange-traded funds have seen a surge in inflows this month as some investors seek to position for amplified gains when markets recover from a selloff induced by U.S. President Donald Trump's trade tariffs. According to LSEG Lipper data, leveraged equity funds have received inflows of $10.95 billion so far this month, already surpassing a 5-year high of $9.2 billion recorded last month. The previous peak was in March 2020, when markets were pummelled by the COVID crisis. Leveraged equity funds are designed to deliver multiples of the daily returns of an underlying index such as S&P 500 or Nasdaq 100. They are especially popular among retail investors who want to avoid futures markets, where volatility can trigger margin calls or forced selling if prices fall. Since Trump announced reciprocal tariffs on April 2, the MSCI World Index is down more than 3%, while the S&P 500 and the Nasdaq indexes are down 5% each. Losses were steeper initially but there has been a recovery in markets after his decision to pause those tariffs by 90 days. Rob Kane, director of alternative investments at Commonwealth Financial Network, said inflows into leveraged ETFs were largely driven by expectations of imminent Federal Reserve rate cuts and the view that tariffs were being used as leverage in broader trade negotiations. "Initial over-reactions driven by investor sentiment have often reversed quickly, and the short-term performance nature of leveraged ETFs, combined with the substantial gains they can generate, makes them a tactical tool for capitalizing on heightened price dislocations," he said. These funds have gained popularity, thanks to the rise of trading platforms such as Robinhood, which offer ease of access to these types of ETFs for retail investors. However, some analysts warned that these funds suffer from performance decay, where returns erode over time due to daily rebalancing and market volatility, making them risky for long-term holding. Vince Stanzoine, chief executive officer at First Information, said leveraged ETFs were not suitable for longer term holdings and the daily resets played havoc with returns, especially when markets were not trending. "In fact professional traders including myself will short X3 leveraged ETF such as TQQQ to benefit from this decay and inefficiencies." (Reporting By Patturaja Murugaboopathy and Gaurav Dogra in Bengaluru;Editing by Vidya Ranganathan and Alison Williams) Sign in to access your portfolio
Yahoo
21-04-2025
- Business
- Yahoo
Investors flock to safety of US short-term government bond funds
By Patturaja Murugaboopathy (Reuters) -U.S. short-term government bond funds have received large inflows this month even as most other funds across asset classes suffered heavy selling in markets hit by worries over U.S. tariffs and recession risks. Treasury yields have risen this month, as the bonds sold off, as hedge funds unwound their leveraged positions in basis trades and overseas investors sold them in apparent retaliation for tariffs and owing to doubts over the safe-haven quality of U.S. assets. However, short-term bonds have rallied after the initial selloff, which analysts said showed they offer more safety and liquidity and tend to lose less value in response to changes in yields. According to LSEG Lipper, U.S. short-term government bond funds received inflows of $18.1 billion so far this month. If the flows are sustained, April could see them get the highest inflows in two-and-a-half years. In comparison, U.S. bond market funds overall saw outflows of $47.7 billion this month. The Vanguard Long-Term Treasury Index Fund, which includes bonds with maturies greater than 10 years, has fallen 3.45% this month. In contrast, the Vanguard Short-Term Treasury Index fund, which invests in bonds with maturities lesser than 3 years, has risen 0.03%. Steven Roge, chief investment officer at financial advisory firm R.W. Rogé & Company Inc, said the higher inflows into U.S. government short-term bond funds are coming from retail investors and wealth managers, prioritizing income and capital preservation. "When short-term yields are nipping at the heels of long-term ones, many investors are thinking, 'Why take on extra duration risk for maybe just a tiny bit more yield?'". With uncertainty over tariffs and Federal Reserve rate cuts lingering, analysts expect higher bond volatility to divert fund flows out of riskier segments such as high-yield bonds and private credit into short-term government bond funds. "Every time new news comes out that increases the chance for large U.S. or foreign tariffs to be a reality, the risk of recession increases and we should expect more flight into the relative safety of short-term government bonds," said Brian Huckstep, chief investment officer at Advyzon Investment Management. And, when market stability returns, being invested in short-term bonds will enable investors to quickly shift money into riskier assets to capture the rally, analysts said. Leading the inflows this month among short-term government bond funds were the SPDR Bloomberg 1-3 Month T-Bill ETF, the iShares 0-3 Month Treasury Bond ETF, and the iShares Short Treasury Bond ETF, which attracted inflows of $7.9 billion, $4.2 billion, and $2.8 billion, respectively. Sign in to access your portfolio
