• Undervalued emerging stocks lure traders back to risky assets
  • Despite small market share, active EM ETFs see big inflows

As investors scour the globe for under-valued stocks, one increasingly popular destination is actively managed exchange-traded funds that focus on emerging markets.

In the $350 billion market for ETFs that invest in developing-nation assets, the holdings of only about 5% of funds are actively managed — rather than pinned directly to an underlying index, according to data compiled by Bloomberg. But those actively managed funds have lured in more than a third of new cash that’s flowed into the asset class over the past year.