With the SPDR S&P 500 ETF (SPY) and the Vanguard Total Stock Market ETF (VTI) currently trading at forward price earning multiples near 17, investors are regaining their appetite for emerging markets. A year after the taper tantrum smacked emerging markets, flows into the developing countries are picking up, lured in large part by the relative value proposition (and signs of easing in China). In a recent investment note that recommended emerging market stocks, BlackRock’s (BLK) chief global investment strategist cited improving liquidity -- six weeks of positive flows -- as a signal that sentiment is in shift mode.
The two largest emerging market ETFs, the $48 billion Vanguard Emerging Markets Stock Index ETF (VWO) and the $41 billion iShares MSCI Emerging Markets ETF (EEM) both trade at forward multiples below 12. That’s even after a strong rebound during the past six months following the global micro-swoon that started the year:
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