ETP flows hit $13.9bn in January, report’s BlackRock

Feb 10th, 2016 | By | Category: ETF and Index News

January net inflows into exchange traded products hit $13.9bn globally, beating the same month last year, according to BlackRock’s January ETP Landscape Report. The report, which looks at monthly ETP flows across a range of geographies and asset classes, showed that investors were turning to safe haven assets amid uncertain market conditions.

Investors favour safe-haven of US Treasuries as global ETP assets continue to grow

Ursula Marchioni, Chief Strategist, iShares EMEA at BlackRock.

Notably, ETPs tracking US Treasuries were particularly in demand, netting $9.1bn in new assets, the third highest monthly inflow in the last five years. This was in sharp contrast to US equity-based ETPs which saw a significant reversal in demand month-on-month.

Ursula Marchioni, Chief Strategist, iShares EMEA at BlackRock commented: “January 2016 flows were even higher than the 2015 figure as investors used ETPs to express investment views in turbulent markets. A catalogue of uncertainties during the month, ranging from falling crude oil prices and a lower world economic growth outlook, saw global investors shed some risk from their portfolios and turn to safe haven assets. There was a notable swing away from US equities, with over $11bn flowing out of the asset class, compared to over $26bn of inflows in December 2015 alone.”

Within the US equity space, investors sought to abandon the most volatile funds. ETPs tracking mid/small cap firms shed $3.4bn, while cyclical sectors recorded net outflows of $3.5bn. Minimum volatility products saw their net assets increase by $1.3bn. Net flows across all asset classes of US-listed ETPs had a nullifying effect with zero total net gatherings.

In Europe, total net inflows across all ETP asset classes amounted to $3bn. Equity-based funds attracted $2.4bn in net new assets with UK equity funds gathering some $821m. Sovereign bonds were still in demand as investors sought adjustments to increasing ‘risk-on’ exposures; these products drew in $1.4bn. European corporate fixed income ETPs however saw net outflows of $663m.

Marchioni added: “Despite significant volatility in the equity markets, not all ‘risk-on’ assets recorded outflows. This trend was particularly pertinent in Europe, where equities were the flavour of the month in the region. This demand was driven by hints from the European Central Bank to loosen monetary policy, which led to increased optimism among investors about the region’s economic outlook.” Anticipated central bank stimulus in Japan also spurred $5.2bn of inflows into Asia-Pacific equity funds.

Commodity funds gathered $4.3bn globally, the strongest month since February 2015. The major sources of demand were for crude oil and gold products, each recording net inflows of $2.8bn and $1.9bn, respectively.

“Interestingly, global flows into commodity products suggested some contrarian investors believe energy prices could have sold off too far, with commodity products recording their strongest month of inflows since February 2015,” said Marchioni.

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