BlackRock reports record ETF outflows amid coronavirus sell-off

Mar 9th, 2020 | By | Category: ETF and Index News

Investors sold $37.2 billion of ETFs (and ETPs) globally across all asset classes in the last week of February amid escalating worries about the economic impact of the coronavirus outbreak.

BlackRock reports record ETF outflows amid coronavirus sell-off

Record outflows were recorded from ETFs in the final week of February.

According to data from BlackRock, the sell-off represented the worst week for outflows since records began in 2011.

While inflows had been robust during the first three weeks of February, the drastic change in sentiment led to February recording just $28.4bn ETF net inflows, a drop of 42% from January when investors added $67.3bn.

With the sell-off accelerating this month, full-month figures for March are expected to be even worse.

Equity ETFs experienced the brunt of the February sell-off, shedding $31.5bn in net outflows during the final week of the month, also a record for the asset class. Overall flows into equity ETFs during the month were $4.1bn.

Most of the selling occurred in US equity ETFs with investors withdrawing $21.7bn. This marked the first outflow week for US equities this year and the third-biggest outflow week on record.

Despite selling late in the month, February remained a net inflow month for US equities (+$0.7bn). In contrast, emerging market equity ETFs registered outflows of $8.1bn.

Market volatility did little to temper the demand for sustainable ETFs, however, with these funds gathering $5.7bn net inflows in February. ETFs providing exposure to environmental, social, and governance (ESG) factors have recorded net inflows every week of the year thus far despite broad equity outflows.

Fixed income ETFs understandably fared much better than equity ETFs, attracting $17.1bn in net inflows for the month despite investors selling $6.2bn in the last week of February. This was the second-worst outflow week for the asset class.

Rates ETFs were the biggest beneficiary in February, gathering $10.5bn which is more than double the $4.4bn inflows recorded in January.

Sentiment towards credit dampened in February with monthly outflows from high-yield bond ETFs hitting a new record of $6.2bn. This was the first net outflow month for the exposure since August 2019.

Investment-grade bond ETFs continued to gather inflows with investors buying $2.8bn of the exposure globally, although this was down from $4.0bn in January. Beneath the surface, outflows of $0.2bn from EMEA-listed investment-grade ETFs contrasted with inflows of $2.1bn for US-listed counterparts, with fixed income ETFs functioning as an effective liquidity tool amid heightened volatility.

Emerging market debt ETFs experienced $0.7bn in net outflows during the month, equally spread between local currency (-$0.4bn) and hard currency (-$0.3bn) ETFs.

Turning to commodities, inflows to the asset class increased from $5.1bn in January to $6.1bn in February. The majority ($3.7bn) of February inflows went into gold ETFs as investors sought diversification amid market volatility.

Crude oil ETFs also gained $2.2bn inflows in February, continuing the trend of positive flows from January when investors added $0.9bn to the commodity.

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