European ETFs drive global flows in April

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

European listed funds made up nearly a third of all global exchange-traded product flows in April, according to BlackRock’s April 2016 ETP landscape report. April flows saw European-listed exchange-traded funds amount to $3.6bn, with global flows for the same period at $11.1bn.

European ETFs drive flows into global ETP industry

Ursula Marchioni, Chief Strategist, iShares EMEA at BlackRock.

The flows represented a marked slowdown on March when global ETP inflows hit $45.5bn as investors remained cautious over volatility in the euro and tightening financial conditions weighing on sentiment.

It meant that flows into fixed income ETPs last month felt the benefit of $8.4bn globally. Similarly, emerging market debt and investment grade corporate bond flows, which saw $2.1bn and $4.5bn flow in, respectively.

Equities globally only had net inflows of $2.2bn, this was despite US equities seeing $11.5bn which saw investors become more positive in the near-term amid a more-dovish-than-expected Fed stance and the less-negative-than-expected earnings trend, which were supported by the recently weak US dollar. The figure, reflecting a slowdown in GDP growth and stock market rally, and the Fed remaining cautious, was also offset by $14.4bn worth of outflows from European and Japanese equity trackers.

Despite this slowdown, emerging market equity flows remained strong with £3.1bn flowing in, representing the best two months in over three years.

Ursula Marchioni, Chief Strategist, iShares EMEA at BlackRock, said in a statement: “Away from the U.S. developed market equities witnessed outflows of ($11.4bn), as investors redeemed record $6.3bn out of European and $7.8bn out of Japanese equity ETPs. In the case of Japanese equities, the selling was first driven by overseas investors but has now also involved domestic investors. This is due to a growing perception that the Bank of Japan has less firepower to surprise on the easing front. Progress on fiscal reforms could be the catalyst to bring Japanese equities back into focus.

“European equity outflows were driven by domestic and foreign investors with volatility in the euro and tightening financial conditions weighing on sentiment. European stocks still look attractive when considering continued earnings growth and macro expansion centred on private consumption. However, geopolitical risks need to be carefully monitored, considering the current political landscape, including the upcoming EU referendum in the UK and the repeat Spanish general elections.”

In other sectors, flows into smart beta ETPs recorded $7.2bn, with minimum volatility contributing $3.4bn. This took the year-to-date total for minimum volatility ETPs to $11.8bn, surpassing the previous full-year record of $11.6bn during 2015.

Commodity ETPs saw outflows for the first time in seven months, with gold redemptions hitting $0.3bn and crude oil outflows felt their second consecutive month with investors pulling $1.0bn.


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