Emerging Market ETFs Surge as Risk-On Sentiment Returns

Date: 2026-02-02 The Weekly Report's Time Range: 1.26-1.30

Market Overview

The recent week saw notable inflows into broad equity and emerging market ETFs, suggesting renewed investor interest in these asset classes. The top-performing ETFs include a mix of large-cap equity and emerging market products, with several of the largest ETFs in the ranking experiencing double-digit weekly performance. The inflows may indicate a shift toward risk-on assets or optimism about long-term growth potential in global markets. Investors appear to have favored large-cap equity benchmarks and international markets, while bond-related funds showed more modest inflow activity. This could suggest a focus on capitalizing on momentum in equity markets rather than a flight to safety. The performance of several emerging market funds also stood out, potentially reflecting a reevaluation of long-term opportunities in these regions.

ETF Highlights

iShares Core MSCI Emerging Markets ETF (IEMG): This ETF provides exposure to a broad range of emerging market equities. With a 7.94% price increase and $138.76B in AUM, the inflow may indicate growing investor confidence in the long-term potential of emerging markets. The performance could reflect a shift toward international growth opportunities, particularly in light of its inclusion in the top inflow ranks.

Invesco QQQ Trust (QQQ): Focused on the Nasdaq-100 index, this ETF tracks large-cap U.S. tech stocks. Its 1.23% price increase and $411.78B in AUM may indicate continued demand for growth-oriented equities. The inflow could suggest investor optimism about the tech sector's performance and its role in broader equity market trends.

State Street SPDR S&P 500 ETF Trust (SPY): As a broad-based U.S. equity benchmark, SPY’s 1.47% price increase and $708.92B in AUM may reflect ongoing investor interest in large-cap U.S. stocks. The inflow could indicate a preference for diversified exposure to the U.S. equity market, particularly given its high AUM and market relevance.

Invesco NASDAQ 100 ETF (QQQM): This ETF also tracks the Nasdaq-100, with a 1.24% price increase and $73.42B in AUM. The inflow may suggest that investors are allocating capital to tech-centric assets, potentially signaling a sector-specific rotation within the equity market.

iShares iBoxx USD Investment Grade Corporate Bond ETF (LQD): Focused on corporate bonds, LQD’s 0.34% price increase and $28.51B in AUM may indicate moderate investor interest in fixed income. The inflow could reflect a balance between risk-on sentiment and the search for income-generating assets.

iShares MSCI Emerging Markets ETF (EEM): This fund provides broader emerging market equity exposure than IEMG. Its 8.02% price increase and $26.95B in AUM may suggest a particularly strong reentry into emerging market assets. The inflow could indicate a shift in sentiment toward international growth opportunities, especially given the double-digit performance.

iShares Core U.S. Aggregate Bond ETF (AGG): AGG tracks a broad U.S. bond market index, with a 0.25% price increase and $138.32B in AUM. The inflow may reflect a continued search for income and stability within the bond market. Given its large AUM, the inflow could indicate a slight shift in risk preferences among bond investors.

Vanguard Total International Stock ETF (VXUS): This fund offers exposure to international equities outside the U.S., with a 5.59% price increase and $133.22B in AUM. The inflow may suggest that investors are allocating capital to global opportunities, particularly in the international equity space. The performance could indicate a growing preference for global diversification.

State Street Financial Select Sector SPDR ETF (XLF): Focused on the financial sector, XLF’s -2.43% price decrease and $55.29B in AUM may reflect sector-specific underperformance or caution in financials. The inflow, despite the negative price change, could suggest a strategic or contrarian approach to the sector.

AB Emerging Markets Opportunities ETF (EMOP): As a niche emerging market fund, EMOP’s 10.32% price increase and $1.46B in AUM may reflect a strong rebound in specific emerging market opportunities. The inflow could indicate that investors are capitalizing on high-performing, targeted emerging market assets, particularly given its small AUM.

Notable Trends / Surprises

The inflows into multiple emerging market ETFs—particularly IEMG, EEM, and EMOP—suggest a significant shift toward international growth opportunities. These funds experienced some of the highest inflows and notable price increases, possibly reflecting a broader reevaluation of emerging market assets. Additionally, the inflows into both SPY and QQQM may indicate a preference for large-cap U.S. equities and tech exposure, suggesting a continuation of sector-specific allocations. The inclusion of VXUS in the top 10 further supports the idea that investors are seeking global diversification, emphasizing the importance of international equity exposure.

Conclusion

The week’s inflows may indicate a general preference for broad equity exposure, particularly in emerging markets and U.S. large-cap benchmarks. Investors appear to be capitalizing on momentum in both international and domestic markets, with a strong showing from emerging market ETFs. The inflows could point to a shift in risk appetite and a continued focus on growth-oriented opportunities. These flows may also reflect strategic rebalancing or a reentry into underperforming asset classes, particularly in the emerging market space.