November witnessed the highest global inflow ($127.5 billion) for exchange traded products (ETPs) in 2023, nearly doubling the previous month’s figure, revealed BlackRock’s global ETP flows research.
Equity flows reached $87.5 billion, marking the highest since December 2021, while fixed income flows rose to $38.8 billion, the highest since October 2022. Commodity flows remained negative, with $1.5 billion out.
The month saw a notable shift in fixed income allocations, with a surge in buying of credit ETPs. High yield achieved its largest inflow month on record at $11.6 billion, and investment grade saw its highest inflows since January at $10.0 billion. “IG inflows in November were fairly evenly split across intermediate and long-term exposures, with blended maturity ETPs leading and a fourth month of outflows from short duration ETPs. In contrast, HY flows went almost entirely (94%) into blended maturity products,” stated the report.
Meanwhile, emerging market equity flows returned to positive territory at $4.0 billion. In the US, equity ETP inflows of $74.7 billion saw 87% directed to US-listed products, overshadowing the record $8.1 billion flow into EMEA-listed US equity ETPs.
Notably, technology sector flows led globally with $9.2 billion added in November, contributing to tech ETP flows reaching $45.4 billion in 2023, the largest sector allocation. Financials recorded their first inflow month since July, adding $1.7 billion, with US exposures favoured over European financials, which saw outflows.
Laura Cooper, senior investment strategist for iShares EMEA, BlackRock, commented: “The risk-on rotation was evident across both equity and bond flows with the former seeing the strongest month since December 2021, whilst fixed income saw a risk-on rotation from rates. High yield had its largest inflow month on record as investors chased the recent rally, fully unwinding the outflows seen in the asset class year-to-date. Once again, investors have selected ETFs to manoeuvre and implement this risk-on sentiment due to their precision and liquidity.”
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