“5 key stories” driving ETF flows

Global_bondsMore money invested in European equity ETFs by Americans is one of the components of record flows for the exchange-traded product industry lately, BlackRock said. Global exchange-traded products, which include ETFs, saw record monthly inflows in March, record quarterly flows and a record year-to-date pace, according to the ‘BlackRock ETP Landscape’ report. There have been $30.9 billion (€28.9 billion) of inflows into European ETPs year-to-date – more than double the $13.3 billion average flow figure seen by this stage of the year since 2010. Patrick Mattar, from BlackRock’s iShares ETF business, said there were “five key stories” behind European ETP flows last month. These were:    ·   Equity dominance continues
“For the sixth month in a row, flows into European-domiciled equities funds (+$7.1 billion) surpassed fixed income (+$2.7 billion). This is the fifth largest ever month of inflows into equities. To put this into context, the previous six months is the largest ever six month period of accumulation for equity ETFs domiciled in Europe.”    ·   Fixed income flows driven by emerging market (EM) debt
“EM debt inflows totalled $1.3 billion in March, achieving the highest level of inflows of any category in fixed income. Both local and hard currency funds have generated significant inflows this year, against the backdrop of President Trump’s protectionist rhetoric. The attractive and relatively high quality yield have been key drivers of flows.”    ·   US investors follow Europeans into Europe
“As geopolitical risks reduce and equity fundamentals improve, investors continue to move into European equities at pace. Both European-and US-domiciled funds have gathered assets every week since early February 2017. December 2015 and January 2017 combined, $39 billion was withdrawn from US-domiciled European equity funds, a reduction in the total asset base of 45%.”    ·   The EM-pire strikes back
“Following the US election EM equity and fixed income ETFs saw large outflows driven by President Trump’s protectionist policies. This year that situation has reversed, with flows intensifying over March. The positivity towards EM is about more than just fixed income. Despite remaining $80 million behind their pre-election assets under management, European-domiciled EM equity ETPs have rebounded. This suggests that investors have focused more on the pull back in US dollar and the reduction in US treasury yields, rather than the recent rate hike.”    ·   Rivers of gold
“Following the US election, investors were selling their holdings in gold ETPs. This year, views have seemingly diverged by domicile. European investors have consistently added to gold ETPs, with only two weeks this year in which there have been outflows and close to $1 billion of inflows over March. Flows into gold funds domiciled out of Europe have been much less consistent, with some large outflows at the start of the month. This dynamic suggests European investors are currently more focused on portfolio diversification than those elsewhere.” ©2017 funds europe

Sponsored Profiles

SPONSORED FEATURE: Alternative thinking

Mar 16, 2017

Portfolio Manager Davide Cataldo discusses the results of the Pioneer Investments’ survey on liquid alternatives and how investors can be encouraged to increase their allocation.

SPONSORED FEATURE: Interest rate risk hedging: Swapping to other options

Mar 16, 2017

Heightened margin requirements for cleared and uncleared OTC derivatives pose a challenge for legitimate hedging activities and are driving financial institutions to explore alternative hedging...

SPONSORED FEATURE: Why blockchain could be the fund industry’s next Ford Model T

Mar 16, 2017

Blockchain aims to radically change the way investors can access funds, says Olivier Portenseigne, Managing Director and Chief Commercial Officer of Fundsquare.

SPONSORED FEATURE: Open architecture: In need of protection

Mar 16, 2017

Greater efficiency must be embraced to ensure regulatory changes do not destroy choice for fund buyers, says Bernard Tancré of Clearstream.

Executive Interviews

INTERVIEW: Finding managers that can (and do)

Apr 18, 2017

Fabrice Kremer, a fund selector at Banque de Luxembourg Investments, has berated fundamental managers for failing to beat indices, but he remains committed to active funds. He speaks to Nick...

JERSEY INTERVIEW: ‘A steady sort of place’

Mar 21, 2017

The chief executive of Jersey Finance is keen to portray the island as a stable, trustworthy jurisdiction. He talks to George Mitton.


ROUNDTABLE: The issue is perception

Mar 21, 2017

Our panel discuss tax transparency, the elegance of private placement and why Jersey could do more to promote itself. Chaired by Tom Cowsill in Saint Helier.


Mar 07, 2017

Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.