US equity demand boosts global ETF flows to YTD record

Aug 11th, 2016 | By | Category: ETF and Index News

Global net flows into exchange-traded products hit $55.2bn in July, a record month for 2016, according to data from BlackRock, the asset manager behind the iShares range of exchange-traded funds.

US equity demand boosts global ETF flows to YTD record, finds BlackRock

As of the end of July, YTD global ETP flows had reached $173.5bn, bringing the total ETP industry AUM to over $3.3tn.

Equities were the strongest performing asset class during the month as total global equity inflows reached $34bn, supported by relatively resilient markets and lower-than-expected signs of stress in the immediate aftermaths of the Brexit vote. US equity inflows were the main contributor, netting $32bn.

Ursula Marchioni, Chief Strategist for iShares EMEA, said: “In July, investors didn’t panic or try to de-risk portfolios, but rather capitalised on some buying opportunities and continued to search for yield in a low return environment which is even more likely to continue.

The monthly net gatherings of US equity ETPs were the highest since December 2014. US large cap ETPs experienced the strongest net inflows with $21bn, while dividend-weighted and minimum volatility strategies were also popular for the region, with $4.8bn and $1.4bn respectively.

Also within equities, emerging market exposures were in demand, attracting $8.2bn. Despite volatile monthly flows, the category has gathered $16.7bn in net new assets year-to-date (YTD).

“Emerging markets were the standout for the month, with $11.2bn of flows into debt and equities products,” added Marchioni. “Although counter-intuitive, emerging markets seem to have earned a safe haven status due to the perceived distance from volatility driven by developed markets, combined with a view that market conditions will unlikely bring Fed tightening and a strong Dollar anytime soon.”

European equities fell out of favour to the tune of $8.8bn as investors continued to weigh up the implications of Britain’s decision to leave the European Union.

Fixed income ETP net gatherings accelerated to $13.9bn driven by flows into investment grade bonds of $4.9bn, emerging markets debt of $3.9bn, and high yield corporate bonds of $2.1bn. US treasury ETPs experienced $600m in net outflows.

Marchioni noted: “Fixed income funds remain on track for a record year, having rebounded by nearly $14bn. US corporates were the biggest contributor across fixed income flows for the month, while US Treasuries were one of the only fixed income exposures to witness net outflows.”

Broad market commodity funds added $1.3bn in flows. Gold ETPs were again in favour with $3.2bn in net inflows. YTD flows into gold ETPs have climbed to $25.1bn, higher than 2009’s record full-year flows of $17bn.

As of the end of July, YTD global ETP flows had reached $173.5bn, with $58bn from equity ETPs, and $80.6bn from fixed income ETPs. The total ETP industry had $3.3tn in assets under management.

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