Tradeweb reports strong buying of fixed income ETFs during June

Jul 11th, 2019 | By | Category: Fixed Income

Tradeweb has reported strong net buying of fixed income ETFs on its European ETF marketplace in June, a month in which the platform experienced its third-highest total traded volume ever.

Tradeweb reports strong buying of fixed income ETFs during June

June marked the third-strongest trading month ever recorded on Tradeweb’s European ETF marketplace with €28.4bn in notional volume.

Tradeweb’s total platform flow in Europe amounted to €28.4 billion with 65.4% of transactions processed via Tradeweb’s Automated Intelligent Execution Tool (AiEX), a new monthly record.

Trading activity in fixed income ETFs increased to 43% of overall platform flow in June, higher than the previous 12-month rolling average by nine percentage points.

June marked the eighth consecutive month of net buying for fixed income ETFs with ‘buys’ amounting to 57% of trading activity within the asset class.

Investors were particularly bullish about corporate bond ETFs where ‘buys’ outstripped ‘sells’ by 22 percentage points.

By contrast, equity ETFs saw ‘sells’ surpass ‘buys’ by four percentage points with the asset class accounting for 52% of total platform flow, nine percentage points below its previous 12-month rolling average.

North American equities were the most heavily traded category in June, after last holding the top spot in March 2019; however, the proportion of ‘sells’ was broadly in line with ‘buys’ during the month.

European equity ETFs, which was the second most heavily traded category in June with €4.3bn in notional volume, experienced much stronger net selling at 58% of its total flow.

Source: Tradeweb.

Source: Tradeweb.

Fixed income products dominated June’s ‘most actively traded’ ETF list, making up eight of the top ten traded funds. The iShares € High Yield Corporate Bond UCITS ETF (IHYG), which provides exposure to sub-investment grade corporate debt denominated in euros, ranked first.

Source: Tradeweb.

Source: Tradeweb.

June also marked the end of the best performing quarter for European ETF trading on Tradeweb.

Adriano Pace, Head of Equities (Europe) at Tradeweb, commented, “Total notional value traded in Q2 2019 was €84.3bn, up €1.4bn from Q1 2019. This was largely thanks to increased platform adoption by institutional clients coupled with continued bouts of volatility, particularly around May’s market correction and its subsequent recovery in June.”

US-listed ETFs

Total consolidated US ETF notional value traded in June 2019 was $10.5bn. Equity ETFs accounted for 46% and fixed income ETFs for 49% of total platform flow, with the remainder comprised of commodity and specialty ETFs. Over 54% of US ETF trades were executed via the Tradeweb AiEX tool.

Adam Gould, Head of US Equities at Tradeweb, said, “June was a strong month for the US equity market, with the VIX declining 19% and the S&P 500 rising 7% from the end of May. Investors clearly were in ‘risk-on’ mode due in part to expectations that the Federal Reserve would cut rates at its July meeting. In turn, we continued to see elevated volumes in fixed income ETFs of varying durations, as investors positioned themselves accordingly. Trading was particularly active in funds benchmarked to the short end of the curve.”

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