In its latest research on global Exchange Traded Product (ETP) flows for 2023, BlackRock’s iShares division reported a record-breaking year for fixed income inflows, with a substantial $331.9 billion added.
The figure highlights the year as the second-highest inflow year on record for global ETPs, totalling $965.4 billion, just behind 2021’s record of $1.3 trillion.
Equities also saw significant inflows of $640.3 billion, marking it their second-highest year, although not surpassing the 2021 record. In contrast, commodities experienced a third consecutive year of outflows, totalling $15.4 billion.
The last quarter of 2023 indicated a notable return of risk appetite, with equity ETPs attracting $274.1 billion in inflows, the third highest for any quarter on record. Fixed income followed suit, with Q4’s $97.6 billion being the second-highest quarterly inflow, trailing only behind Q2 2020.
This shift in Q4 was particularly evident in fixed income. Credit ETPs saw a significant $29.1 billion influx, while rate flows dropped to their lowest since the first quarter of 2022. High yield flows, negative until late October, reversed to end the year with $9.1 billion in inflows.
The year 2023 was diverse for fixed-income ETPs across various exposures. Rates led with $170.7 billion, down from 2022. Emea-listed fixed-income ETPs set new yearly records in rates and investment grade categories. Credit flows concluded positively, with emerging market debt reversing the previous year’s outflows.
In Europe, fixed-income investment proved to be popular, with a record $38.2 billion added, and European equities ended the year up $7.7 billion, recovering from a mid-year slump. The tech sector dominated sector flows in 2023, while quality factor ETPs saw record inflows. Financial sectors rebounded in Q4, but healthcare ended the year negatively.
Commodities, particularly gold, continued to be out of favour, with gold ETPs experiencing their second-highest outflow year on record. The trends in 2023 for global ETPs depicted a year of high inflows in certain sectors and shifting investor sentiments, especially towards the end of the year.
Laura Cooper, senior macro investment strategist for iShares EMEA at BlackRock, said, “Investor risk appetite was strong in 2023 as evident in the second-highest inflow year on record for global ETPs, with $965.4 billion added.
“A record-breaking year for fixed-income ETP adoption aided the advance, where $331.9 billion of buying was driven by increases across the fixed-income spectrum. Strong conviction in rates through the year gave way to spread assets towards year-end alongside the broad risk rally, as highlighted by a combined $29.1 billion to credit ETPs alone in Q4.”
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