“There is a risk that there is more tourist money coming into the asset class through ETFs. It could increase the risk of feedback loops of weakness amplifying the weakness in the market,” she said in a telephone interview. “For active investors it increases pressure to beat the benchmark. They may take on more risks.”
The demand for higher-yielding debt with interest rates historically low in much of the developed world has pushed emerging-market bonds into the mainstream for global investors, according to Adam Laird, head of ETF strategy at Lyxor Asset Management. ETFs provide a relatively straight-forward and low-risk way of accessing the market, he said.
“The low interest-rate environment has forced people to consider asset classes they haven’t had to consider before,” said BlackRock’s Schenone. “ETFs help people invest more efficiently.”
This article was provided by Bloomberg News.