The global ETF industry gathered $52.6 billion in November, $40.9bn of which flowed into equity funds led by US and broad developed markets exposures, according to BlackRock’s latest ETF industry landscape report.
US equity ETFs drew in $17.4bn in net inflows globally during November.
US equity ETFs drew in $17.4bn in total, with $4.2bn and $3.1bn going to large- and small-cap funds respectively. Cyclical sector funds also saw significant inflows, netting $5.5bn in new assets, with financials ETFs ($2.1bn) and technology ETFs ($1.4bn) absorbing most of this demand. There was also strength in momentum and value factor funds amid a backdrop of solid economic growth.
Broad developed markets equity ETFs collected $9.6bn which BlackRock attributes to strong earnings and economic data coupled with accommodative central bank policies. Japanese equity ETFs attracted $7.1bn, while demand for emerging markets ETFs cooled to $1.7bn despite a relative weakening of the US dollar in November.
Fixed income flows remained resilient at $11.0bn overall, led by investment grade corporates with $4.1bn and inflation-protected bonds with $1.2bn. EM debt funds saw outflows of $0.5bn, but remain on record pace with year-to-date net inflows of $15.3bn.
Finally, within commodities, crude oil ETFs shed $1.2bn marking a fifth consecutive monthly outflow for the category.
Focusing on the EMEA ETF industry, funds listed in the region gathered $10.2bn in November, the third largest monthly inflow of the year. This was up from the $7.5bn gained in October. YTD inflows now stand at $91bn, already more than $10bn higher than the previous full-year record set in 2015.
Equities were the most popular asset class yet again, taking $6.7bn of the inflows. November proved to be another month of large inflows for EMEA-listed broad developed equity ETFs, which attracted over $1.5bn in net inflows. According to Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, this marks a continuation of a trend seen in four of the last five years where this category received more inflows in Q4 than any other quarter.
EMEA-listed European equity ETFs have now had 15 consecutive months of inflows, extending their longest run on record. Also, for the first time since July, US-listed European equity funds also had inflows, adding $716m. Mattar noted, “This inflow to US-listed products coincides with a rally in the EUR/USD cross rate. As the euro strengthened against the dollar, US investors looked to Europe.”
Fixed income ETFs added $3.0bn, their largest monthly inflow since June, and their third largest inflow month of the year. The majority of flows went into US dollar-denominated and euro-denominated investment grade debt ETFs.
Mattar highlights that although one of the dominant themes in fixed income this year has been flows into EM debt ETFs, especially in Europe where $8bn has been added, the asset class has struggled to continue such demand in Q4. He said, “November was just the second month of the year with outflows from emerging market debt ETFs, which lost $750m. The majority of outflows in November were from hard-currency products.”
Meanwhile, EMEA-listed commodity funds had their second consecutive month of inflows, adding $408 million. Almost $750m was added to EMEA-listed gold ETFs in November, making it the biggest month for inflows since February. The divergence in flow patterns between US-listed and EMEA-listed gold ETFs has been an enduring theme this year. In November, the trend continued as US investors withdrew $175m.