BlackRock ETP Landscape : Global ETP Flows January 2021

BlackRock ETP Landscape

BlackRock ETP Landscape: Global ETP flows slightly picked up in January, with $85.5B of inflows (vs. $84.0B in December 2020). Flows into equity ETPs accounted for the majority of the inflows, as was the case in the previous two months.

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Global ETP Flows January 2021

Fixed income flows rose slightly to $21.2B, and commodity flows returned to positive territory for the first time since October, at $3.1B.

Key themes in January:

  1. Sectors in focus: investors continue to differentiate through sectors
  2. Diversifying equity exposure: broad-based buying
  3. Link(er) up: inflation-linked bond flows continue to test record levels
  4. Sustainable sets the standard (again): another record month of flows

Sectors in focus

  • Buying across sector ETPs remained strong in January, in a continuation of the trends seen towards the end of 2020. Flows into financials totalled $6.8B, boosted by the broad uptick in sentiment towards cyclicals in the days following the Georgia vote. This was the second-highest inflow month on record for financials ETPs, falling short of the $7.6B added in November 2016.
  • Cyclical sectors continued to be popular: energy gained a record $4.9B of inflows, industrials ETPs added $3B (the secondhighest inflow month on record), and materials gathered $1.9B, including a record $0.6B into EMEA-listed products.
  • Meanwhile, flows into tech ETPs also rose, hitting a record $8.5B in January. Tech was the most popular sector in 2020 and has started 2021 on a similar footing. Differences below the surface show an increase in selectivity: flows into EMEA-listed subsector and thematic funds have increased, whereas in 2020, buying of broad tech exposures led the inflows. Flows into healthcare – which had also been popular in 2020 – dropped to almost flat in January, with US investors in particular turning cool on the sector; EMEA-listed buying has persisted, albeit at lower levels.

Diversifying equity exposure

  • Buying in broad DM equity ETPs and EM equity ETPs drove the inflows in January ($36.3B), with regional exposures falling out of favour. Global flows into US equities dropped to the lowest level since July 2020 ($3.3B), and flows into European equities fell to $0.8B, from $2.6B in December. Under the surface, there was divergence across listing regions, with US equity ETP flows driven exclusively by EMEA buying: investors added $3.1B to EMEA-listed US equity ETPs – predominantly into sustainable products – while net flows into US-listed US equity ETPs were flat, leading to the overall drop in US equity buying.
  • Flows into European equities were more broad-based, with US-listed flows accounting for approximately half of the $0.8B of European equity buying, and representing a pickup in sentiment in US-listed European equity ETPs, which had registered outflows in December.
  • EM equity flows have stayed reasonably consistent over the past three months, and recorded $10.4B of net inflows in January. USlisted flows made up the bulk of the inflows, with EMEA-listed inflows accounting for $3.7B in January and APAC-listed flows ending the month flat.

Link(er) up

  • Inflows into inflation-linked bond ETPs hit $4.2B in January, just shy of the record inflow month of $4.3B in June 2020, helped by a pickup in US-listed flows. The continued allocation to linkers ($3.8B was added in December) has come alongside expectations for a pickup in inflation over the medium term, as economies open up. • Elsewhere in fixed income, multisector FI products led the inflows for a second consecutive month ($12.8B), with outflows from high yield (HY) at the headline level, and flat investment grade (IG) flows. The cooling conviction on credit is another trend that has carried over from 2020.
  • Delving a little deeper, EMEA-listed flows into HY in January (at a reduced $0.4B) were offset by $3.8B of outflows from US-listed HY. The opposite was true for IG: selling out of EMEAlisted IG ETPs (-$0.9B) was more than made up for by the $1.5B of inflows into US-listed counterparts.

Sustainable sets the standard (again)

  • The march to sustainable shows no signs of stopping, with a record inflow month in January: $17B was added to sustainable ETPs across US and EMEA-listed products, with monthly inflows up $10B vs. this time last year. Sustainable ETP AUM is now within touching distance of $200B – it currently stands at $187B, up from $62B this time last year.
  • Within sustainable ETPs, climate-oriented thematic ETPs led the inflows ($5.0B), with flows largely going into US-listed ETPs. The ‘Best-in-Class’ segment of sustainable products was also popular, with just under $5B added across US, world and EM exposures.
  • Investors added to US exposures via ESG optimised strategies, with $2B of inflows, split across listing regions.

Fuente: ETFWorld


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