Investors are pouring cash into emerging-market funds at a record pace as momentum builds for a rotation out of US assets.
The $134 billion iShares Core MSCI Emerging Markets ETF has absorbed almost $6 billion this month. That puts it on track for the biggest monthly inflow since its inception in 2012 and would beat the previous record set in November 2025. The fund, which invests in the broadest set of emerging-market stocks, received $639 million of fresh deposits on Wednesday.
It’s more evidence that investors are piling into the asset class, with technology stocks from Asia soaring to record highs and asset-managers around the world looking for alternatives to US markets. One of the world’s biggest funds tracking US equities, the SPDR S&P 500 ETF, has bled $13.4 billion this month, putting it on track for its worst month of outflows since March, as President Donald Trump’s latest tariff threats over Greenland roiled markets.
Another BlackRock fund that tracks the narrower MSCI benchmark has received $2.43 billion of inflows this month, the most since January 2018. One thing common to both funds: 70% of their portfolio is concentrated in four Asian markets — Taiwan, China, India and South Korea.
Accelerating investments in EM equity funds coincide with the revival of a diversification trend in which investors pare their exposure to US assets in response to President Trump’s volatile policy decisions. As early as last year, some investors began to view higher-quality emerging markets as safer than developed peers, citing stronger fiscal and current-account positions and more predictable policy settings.
“The diversification trend away from US risk assets in both equities and fixed income that started post Liberation Day last year remains very much in place,” said Alan Siow, a portfolio manager at Ninety One. “Investors are trying to price when daily headlines that might reverse in a few days or weeks might instead harden into a lasting new paradigm. When the market comes to that conclusion, the trickle might well become a flood.”
Emerging-market stocks are outperforming their US peers at the start of 2026. The MSCI Emerging Markets Index has risen 6.2% in January, while the S&P 500 Index is little changed. That follows EM equities’ first year of outperformance over the US benchmark since 2017.
The MSCI gauge recaptured a record high Thursday after Trump’s latest comments on his Greenland plans eased fears of a blow-up in transatlantic relations. Meanwhile, the rally in artificial-intelligence stocks remains on track, despite concerns over valuations.
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