Tradeweb’s European ETF market reaches new trading record amid sell-off in equities

Jun 17th, 2019 | By | Category: ETF and Index News

Trading activity on Tradeweb’s European ETF marketplace reached a record-breaking €29.9 billion in May, led by net selling in equity ETFs.

Adriano Pace, Head of Equities (Europe) at Tradeweb

Adriano Pace, Head of Equities (Europe) at Tradeweb.

The strong trading volumes narrowly beat the platform’s previous best performance set in February by €391 million.

Adriano Pace, Head of Equities (Europe) at Tradeweb, commented, “Stock ETFs were primarily sold in May amid investor concerns over ongoing trade disputes, geopolitical uncertainty, and a global economic slowdown. Instead, assets such as government bonds were aggressively bought and saw high traded volumes.”

Activity in equity ETFs fell to 59% of the platform’s total traded volume, two percentage points lower than the previous 12-month rolling average. ‘Sells’ in equity ETFs outstripped ‘buys’ by 54% to 46%.

European equity ETFs were the most heavily traded ETF category with more than €5.7bn in notional volume. ‘Sells’ narrowly outpaced ‘buys’ by 51% to 49%.

ETFs providing exposure to North American equities were also strongly traded with €4.6bn in notional volume recorded during the month. Interestingly, investors were net bullish on North American equities with ‘buys’ surpassing ‘sells’ in the asset classes by 54% to 46%.

Emerging market ETFs, which accounted for €3.2bn in trading activity, were heavily sold off with ‘sells’ outstripping ‘buys’ by 67% to 33%.

Fixed income ETFs accounted for 37% (€11.1bn) of total platform flow, notably above the previous 12-month rolling average for the asset class of 34%. The proportion of ‘buys’ to ‘sells’ in fixed income was greater by 53% to 47%.

Commodity ETFs also saw net buying with a ratio of ‘buys’ to ‘sells’ of 51% to 49%. Overall activity in the asset class dropped to 4% (€1.2bn) of the platform flow, trailing the previous 12-month rolling average by one percentage point.

Source: Tradeweb.

Source: Tradeweb.

Reflecting strong buying activity in emerging market bonds, the iShares JP Morgan EM Local Government Bond UCITS ETF proved to be the most heavily-traded product for the second consecutive month.

In second place, the Xtrackers MSCI World Swap UCITS ETF last featured in the top ten list in February 2019.

Source: Tradeweb.

During the month, the proportion of transactions processed via Tradeweb’s Automated Intelligent Execution Tool (AiEX) increased to 55.7%, a new monthly high.

US-listed ETFs

Total consolidated US ETF notional value traded in May 2019 was $7.7bn. Equity ETFs accounted for 40% and fixed income ETFs for 46% of total platform flow, with the remainder comprised of commodity and specialty ETFs. Nearly 53% of US ETF trades were executed via the Tradeweb AiEX tool.

Adam Gould, Head of US Equities at Tradeweb, said, “As trade tariffs dominated the news, May proved to be a very challenging month for equities with most trading lower. Conversely, there was an outsized amount of activity in the fixed income ETF space. Some investors moved from equities to bonds, while others moved from high yield bonds to less risky shorter-dated Treasuries.  Nearly half of the Tradeweb US ETF platform volume was in fixed income funds; an outsized number relative to the overall market and our platform generally.”

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