Investors are fleeing emerging markets, and more pain could be ahead. Here's why

Emerging markets stocks have been under pressure as the U.S. dollar has gained ground, and one portfolio manager is expecting more pain for the group.

Last week, U.S.-based emerging market equity funds posted their first weekly outflows of the year, according to Reuters, citing Lipper data. The EEM emerging markets ETF fell nearly 2 percent in that time, and 3 percent in the last month.

Chad Morganlander, portfolio manager at Washington Crossing Advisors, explained to CNBC's "Trading Nation" his reasons for selling emerging market stocks. Here's why:

• Emerging markets logged a banner year in 2017, with the EEM rallying nearly 35 percent for its best year since 2009, as global growth ramped up and the U.S. dollar fell substantially. This year won't be so rosy.

• The U.S. dollar just posted three straight weeks of gains, depressing emerging market stocks in that time, which will likely continue as a headwind going forward.

• The eventual deceleration in China's credit growth, too, will pose a headwind. At this point, however, the U.S. trade policy with China and recent turmoil in the space is not a major factor in emerging markets' performance.

Bottom line: Emerging markets have weakened recently, and will likely see further downside from here, according to Chad Morganlander.

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Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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