Trading activity in ETFs spiked on the back of Tuesday’s market volatility, according to a statement from BlackRock, with $8.8bn traded across its iShares EMEA-listed range over the course of the day – equivalent to 340% of average daily volume.
BlackRock reports $8.8bn was traded across its iShares EMEA-listed ETF suite on Tuesday 6 February 2018.
The figures highlight a growing trend of investors turning to ETFs as the investment vehicle of choice to navigate markets.
The trading volume was a record high for a single day. By comparison, $5bn traded across the range on 24 June 2016, the day following the UK’s referendum on EU membership.
BlackRock reports that ETF trading was orderly throughout the day.
As a result of new MiFID II post-trade requirements, all over-the-counter trades are now reported, creating more visibility for investors. Of the $8.8bn traded yesterday, over half ($4.9bn) was off exchange but now visible to investors.
Stephen Cohen, head of iShares EMEA at BlackRock, said, “The challenge for many European investors looking to invest using ETFs has been the inability to get a full picture of trading activity. MiFID II trade reporting requirements are changing all that, by shining a brighter light on where and how much ETFs are trading. As a result, we expect to see more investors building smart, modern portfolios using ETFs, both at the core and for tactical plays.”
Wei Li, head of investment strategy, iShares EMEA, commented: “Two-way flows in developed market equity ETFs suggest divergent investor views. As markets were falling some investors were scoping out ‘buy-on-dip’ strategies citing strong fundamentals. We believe the slide was mainly driven by an unwinding of popular trades betting on low equity volatility. The pullback could be an opportunity to add risk especially as stretched valuations had been a concern. We favour equities in Eurozone, Japan and emerging markets in this environment.”
While the total traded on Tuesday represented 340% of the total average daily trading volume of the iShares EMEA range, some ETFs within the suite experienced volumes more than 1,000% higher than their average.
The top 10 European iShares ETF by volume traded on Tuesday 6 February, were:
Source: BlackRock.