EM managers avoid benchmark stocks as ETFs prompt price swings

Active emerging market equity managers have been given a further incentive to invest ‘off benchmark' after recent market falls emphasised the role played by ETFs.

The EM sell-off last month went hand-in-hand with the $12.2bn (£7.4bn) in emerging market equity redemptions seen in January, according to EPFR Global, close to the $15bn outflow for 2013 as a whole and driven by $8bn in ETF outflows. That has prompted emerging market managers to consider the implications of investing in stocks that make up their benchmark indices: stocks which appear increasingly volatile given their more liquid asset base and ETF interest. "The [MSCI Emerging Markets] benchmark is only a third of our investable universe. There are lot of opportunities in the broader...