## Figure 1.22. Emerging Market Benchmark-Driven versus Unconstrained Investors

## Source details

**Canonical URL:** [Figure 1.22. Emerging Market Benchmark-Driven versus Unconstrained Investors](https://www.imf.org/-/media/files/publications/gfsr/2019/april/english/ch1data/charts/figure1-22.pdf)

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### Schematic: EM Benchmark-Driven versus Unconstrained Investors
- Benchmark-driven investors tend to treat EMs as an asset class.
- Greater focus on country-specific developments (Unconstrained investors).
- Investment Vehicles:
  - Retail investors
  - Institutional investors
  - Ultimate Investors
- Global versus Country Factors:
  - Benchmark-driven: Greater focus on global factors
  - Unconstrained: Greater focus on country-specific developments
- Behavior toward Benchmarks:
  - Benchmark-driven: Tracking error a major constraint; Greater flexibility for off-benchmark investments (Unconstrained)
- Benchmark-driven investors have a larger presence in hard currency debt than in local currency sovereign debt markets.
- Passive investors are still only a small share of the overall asset class.

### Assets Benchmarked to JP Morgan EM Indices and Market Capitalization
- Chart title: 2. Assets Benchmarked to JP Morgan EM Indices and Market Capitalization (Billions of US dollars)
- Series / Labels shown:
  - Assets under management benchmarked to EM indices
  - Market value of most popular index
  - Market value of broadest index
  - EM equity
  - US equity
  - EM local sovereign (right scale)
  - EM hard currency (right scale)
  - US high yield (right scale)
- Axis tick labels and values displayed in source figure (verbatim):
  - Left-hand axis: 0, 500, 1,000, 1,500, 2,000, 2,500
  - Right-hand axis: 0, 1, 2, 3, 4, 0, 5, 10, 15, 20
  - Additional sequence shown in figure: 1011121314151617182009

### Share of ETFs and Passive Funds as a Percentage of Asset Class
- Chart title: 3. Share of ETFs and Passive Funds as a Percentage of Asset Class (Percent)
- Fund categories displayed:
  - Benchmark-driven
  - Unconstrained
  - Passive funds (index funds, ETFs)
  - “Active” funds (for example, mutual funds)
  - Unconstrained funds (for example, hedge funds, absolute return funds)
- Observation text from figure: Passive investors are still only a small share of the overall asset class.

### Notes and definitions (from figure)
- In panel 2, “broadest index” refers to the version of the JPMorgan Index without the diversification weighting scheme and with the largest available issuer coverage.
- “Most popular index” refers to the version of the JPMorgan Index that is most widely followed in its asset class.
- Abbreviations: EM = emerging market; ETF = exchange-traded fund.

*Sources: EPFR Global; JPMorgan Chase & Co.; and IMF staff estimates.*

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_Source: https://www.imf.org/-/media/files/publications/gfsr/2019/april/english/ch1data/charts/figure1-22.pdf_