European-listed ETF market flows remained steady in July with net new assets (NNA) over the month totalling €8.7 billion, according to monthly flows analysis from Lyxor. However, fixed income flows decreased to €2.3bn, close to the lowest monthly level of the year.
Marlene Hassine Konqui, head of ETF research, Lyxor.
Marlène Hassine Konqui, head of ETF research at Lyxor, commented: “Both developed and emerging markets govies were negatively impacted by the more hawkish environment in the US and in Europe and the threat of rising rates. Developed govies saw €427 million of outflows while emerging market debt inflows decreased €612m after a year of monthly inflows close to €1bn.
“On the positive side, both corporate bond and money market ETFs kept seeing inflows of €1bn and €731m respectively, mainly dedicated to floating rate note and short-term ETFs in a rising rate environment. Normalisation expectations increased inflation-linked ETF flows with €334m NNA.”
In the equity space, flows into European-listed ETFs during July reached €5.5bn. Equity ETFs with exposure to Europe made up roughly two-thirds of these NNA with €3.4bn during the month, the second highest month of inflows seen year-to-date, as the region continued to display signs of economic growth.
“European-listed ETFs focusing on US equity continued to recover reaching €774m, helped by the weakening dollar and a strong earnings season, in particular in the tech sector,” added Konqui. “Flows into Asia Pacific equity ETFs listed in Europe slowed down to €301m as PM Abe and Japan’s Abenomics was challenged. Global equity ETF inflows continued to decelerate, to €253m, as global monetary normalisation took centre stage and unsettled markets.”
Monetary policy normalisation also negatively impacted emerging market equity ETF flows which were reduced to €306m – their lowest level in six months. Once again, these flows were almost exclusively focused on broad-based ETFs rather than single countries.
European-listed smart beta ETF inflows totalled €253m, in line with their one-year average. Flows were mainly focused on factor allocation strategies, namely multifactor and value ETFs.
Commodity ETFs listed in Europe saw €748m of inflows during July, the highest inflows for one year. The vast majority of these were made up by flows into gold and precious metals ETFs.