Market Insider

Investors move cautiously back into emerging markets as dollar strength fades

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Futures Now: Dollar hits 6-week low

Investors tiptoed back into emerging market stocks last week as the recovery in the asset class looks set to continue — slowly — as the U.S. dollar's continued strength is increasingly in question.

Actively managed emerging market equity funds saw their first net inflows in 11 weeks, while passive funds saw their first inflows in four weeks, according to data from EPFR Global. Emerging market assets include stocks of companies in countries such as China, Brazil, Russia and India.

"There's been some inflow but it hasn't been that big," said Ilya Feygin, managing director and senior strategist at WallachBeth Capital.

"If you're right on the dollar you have a very good shot on being right on the general broad emerging market," he said. Feygin expects the greenback to stay under pressure and emerging markets could see better returns than developed markets this year given relative attractiveness.