BlackRock ETP Landscape: September marked a return for inflows into EMEA-listed exchange traded products (ETPs), with $20B of inflows, smashing the previous record set in July….
EMEA-listed ETP Flows September 2019
This followed a record outflow month in August. $13.9B went into equity ETPs in September (reversing the $13B lost amid market volatility in August), $5.1B into fixed income and $0.8B into commodities.
Key themes this month:
- European equities go back to black: European equities notch up inflows
- A bIG streak: nine months of inflows for investment grade
- Investors turn cold on min vol: dropping interest in minimum volatility
European equities go back to black
– European equities notched up the largest monthly inflow since February 2018, with $3.7B added in September. This marks the first quarterly net inflow since Q3 2018, when $2.4B flowed in. YTD flows are still well into negative territory at -$8.3B, as heavy selling from March-June has not yet been reversed.
– Elsewhere, record inflows continued as investors also turned to US equities, with the exposure gathering $5.3B – the largest monthly inflow on record, in comparison to just $98m of inflows in August. To put this in context, prior to September, YTD flows into US equities stood at $4.5B.
– In contrast, investors sold emerging market (EM) equities for a second consecutive month (-$1B). This marks the third outflow month for the exposure this year, albeit significantly less than the -$3.7B outflows in August. It is worth noting that global investors turned incrementally more negative on EM earlier in the year than EMEA investors.
A bIG streak
– In fixed income, inflows were once again well spread between investment grade (IG) with $1.4B, emerging market debt (EMD) with $1.2B, and rates with $1.2B, while investors sold high yield (HY) for only the second time this year (-$120m). IG has now notched up nine consecutive months of inflows, in the longest inflow streak since February 2016. IG is still the most popular fixed income exposure this year, with $16.1B of inflows YTD out of $50.1B total flows into fixed income ETPs.
– Inflows into rates were predominantly into short and intermediate-term ETPs – almost entirely USTs – with longer-term ETPs gathering just $141m. Total flows into rates, while still positive, were down significantly from the previous month ($2.2B in August).
EMD inflows offset the $1B lost in August, and were once again skewed towards hard currency ETPs, which have proved to be more popular among investors since June. Local currency ETPs also gathered assets, in the region of $370m.
Investors turn cold on min vol
– Investors sold minimum volatility ETPs in September for the first time since May 2018 amid broad outflows across factors. $0.3B was lost following on from $0.5B added in August, against the global trend. The factor has been the most popular this year by far, with YTD inflows standing at $3.5B in EMEA and $25B globally. Quality, the next most popular factor, has gathered $1.1B YTD.
– Commodity flows simultaneously dropped to the lowest level in four months, with $0.8B added in September, compared to at least $1.7B added in each of the prior three months. Once again, buying in gold was the driver, accounting for 80% of the inflows. Silver ETPs, which have been popular since June, lost $0.1B, essentially cancelling out the $0.1B of inflows in August.