Global ETP flows in April fueled by fixed income

May 10th, 2018 | By | Category: ETF and Index News

ETPs globally have collected $35.4 billion in net inflows in April, according to the latest ETP Landscape report from BlackRock.

Wei Li, head of iShares EMEA investment strategy at BlackRock.

Wei Li, head of iShares EMEA investment strategy at BlackRock.

Monthly industry inflows have doubled in comparison to the $17.7 bn recorded in March, as flows into fixed income funds accelerated and US equity flows turned positive after two months of outflows.

Global fixed income flows during April reached $17.3 bn—a ten-month high—with government bonds, investment grade corporate bonds and broad multi-sector funds leading the way with $6.6bn, $3.2bn and $3.0bn in net inflows respectively.

Commenting on flows in the EMEA region, Wei Li, head of iShares EMEA investment strategy at BlackRock, said, “Fixed income flows returned to positive territory in April as $1.5bn flowed into EMEA-listed ETPs. Emerging market debt and investment grade ETPs continued to be unpopular, with outflows totalling $475m.”

“Government bond ETPs remained the most popular within fixed income for a third consecutive month, gathering $1.5bn of inflows. Within government bond exposures money once again went towards short-duration ETPs, $539m, as the short end of the curve looks appealing to investors given the opportunity to get yield above inflation and at the same time hide in safe havens amidst jittery market sentiment.”

Equity flows were a mixed bag for the month. European stocks saw continued outflows of $5.7bn globally, which was split between broad European funds ($4.8bn) and German Equities ($0.9bn).

According to BlackRock, European Equity funds have lost $11.5bn over the past two months, the first sequential outflows since late 2016.

On investor sentiment towards Europe, Li said, “A wave of mixed eurozone macro data, combined with stronger earnings expectations for the US relative to Europe, appear to have reduced investor confidence.”

Flows fared better across the Atlantic, with US equities raking in $6.9bn compared to the redemption activity of $7.1bn in March. Li attributed the US inflows to “strong earnings expectations and robust macroeconomic data.”

Emerging Markets (EM) equities also came in strong, with inflows to the tune of $6.5bn for April – a trend that appears to be reversing in May. The report noted that “EM central banks have been easing, creating a supportive macro environment for EM growth.”

Last but not least, gold flows reached $2.9bn in April—the highest since July 2016—indicating demand for perceived safe-haven categories alongside the U.S. Treasury flows mentioned above.

Li noted that the flows were the result of “ongoing trade tensions and mixed equity market sentiment.”

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