It’s no secret that investors are clamoring for ex-U.S. equities right now. Flows into international equities set a record in January. That indicates a continuing trend of demand for diversification away from expensive and concentrated U.S. markets. Emerging markets have been a key beneficiary segment of that trend continuing into February, with emerging markets ETF AVEM topping the emerging markets equities EM category for flows.
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AVEM, the Avantis Emerging Markets Equities ETF, outpaced all other emerging markets equities ETFs for flows last month. The fund pulled in more than $2.2 billion in flows according to ETF Database data – $2.24 billion, specifically. Just three other funds saw more than $1 billion in net inflows, speaking to the sheer size of emerging markets demand.
Emerging Markets ETF AVEM Off to Strong 2026 Start
The emerging markets ETF has done so while charging 33 basis points (bps). AVEM provides a systematic active approach to emerging markets that may have contributed to its significant demand relative to other emerging markets funds. The strategy combines active and passive strengths to assess small cap emerging markets companies, looking for strong profits and low valuations.
That active adaptability could help the fund stand out amid growing geopolitical instability. Already to start 2026, conflicts have emerged and impacted important regions and markets – including certain emerging markets regions. At the same time, its active adaptability helps it find companies able to outperform.
The emerging markets ETF has outperformed the ETF Database Emerging Markets Category average over all time frames in the data set. The strategy has returned 51.6% over the last twelve months compared to 38.5% for the category average. It has performed well to open 2026, as well, returning 15.2% YTD.
The strategy offers exposure to East Asian tech names as well as names in other important regions like South America. For those looking at emerging markets funds for the rest of 2026, AVEM may be one to watch.
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