Billions Flood Active ETFs in Hunt for Cheap Developing Stocks

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(Bloomberg) -- As investors scour the globe for under-valued stocks, one increasingly popular destination is actively managed exchange-traded funds that...

-- As investors scour the globe for under-valued stocks, one increasingly popular destination is actively managed exchange-traded funds that focus on emerging markets.The Mortgage Interest Deduction Has Got to Go

Investors have been pouring cash into ETFs that wager on emerging assets in a bid to take advantage of lower fees and avoid the logistics of cross-border trading, reigniting the debate over whether active strategies can offer stronger returns versus passive ones beholden to a benchmark.That momentum is reigniting the debate over whether investors can eke out stronger returns in nimble, active strategies compared to passive ones that are beholden to a benchmark.

More than 95% of cash destined for actively managed EM ETFs in the past year has gone into strategies managed by Avantis Investors, a $40 billion investment offering from global asset manager American Century Investments, and Dimensional Fund Advisors, according to Bloomberg-compiled data. The outperformance has come even as AVEM keeps about 19% of its assets in China, where equities have been plunging. While Dimensional’s active emerging-market offerings also have a significant exposure to China, the strategy offers more emphasis on smaller companies and value stocks, said Rob Harvey, Dimensional’s co-head of product specialists.

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Billions Flood Active ETFs in Hunt for Cheap Developing StocksAs investors scour the globe for under-valued stocks, one increasingly popular destination is actively managed exchange-traded funds that focus on emerging markets.
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