February 2024 marked another “healthy” month for the global ETF industry with inflows totalling €83.6 billion, according to fund performance data provider LSEG Lipper’s Global ETF Industry Review.
Leading the charge were ETFs domiciled in the United States, attracting €51.4 billion, followed by Ireland and Canada with €11.3 billion and €5.1 billion respectively.
Equity ETFs emerged as the top performers, drawing in €56.9 billion in net inflows, trailed by bond ETFs with €19.2 billion and alternatives ETFs with €8.5 billion. Notably, Equity US led the best-selling categories with €27.3 billion in inflows, followed by Bond USD Medium Term and Equity Global.
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Interest in ESG-related ETFs remained strong, with inflows totalling €5.6 billion during February, reflecting investors’ growing focus on sustainability. Vanguard led as the top-selling ETF promoter globally, attracting €22.0 billion in inflows, followed closely by BlackRock and JPMorgan.
Additionally, active and semi-active ETFs saw significant inflows of €20.5 billion, indicating investor appetite for actively managed investment products within the ETF space.
The report highlighted that amidst these positive trends, geopolitical tensions in the Middle East, especially around the Red Sea, added uncertainty to the market. The European Union’s deployment of military ships to safeguard commercial vessels from Houthi rebel attacks further heightened instability, with concerns over potential disruptions to delivery chains.
According to the report, market sentiment was influenced by central bank actions, particularly the US Federal Reserve’s cautious approach to addressing inflation. However, the Fed’s indication of a slower pace of interest rate cuts in 2024 impacted bond ETF inflows, amid lingering concerns over persistent inflation and recession risks, exacerbated by stagnant growth and inverted yield curves.
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Despite these challenges, the performance of tech giants like Alphabet, Amazon, and Apple propelled U.S. markets to new highs, the findings showed. However, reminiscent of the dot-com bubble era, investors grappled with a mix of fear and greed as major equity indices reached record levels in February.
Detlef Glow, head of Emea research at LSEG Lipper, commented: “Commodities Precious Metals witnessed outflows despite the bull market in gold, while the Bitcoin ETFs (to be found in Alternatives Currency Strategies) enjoyed further inflows. Even as it can’t be proved by hard facts that ETF investors sell gold and buy crypto, this flow trend leaves room for this kind of speculation.
This assumption doesn’t appear to be totally wrong, since some investors do see gold as alternative currencies and may now diversify their portfolio by additionally investing into bitcoin.”
