BlackRock ETP Landscape: June marked the highest inflow month for global ETPs in 2020, with $71.5B added. This was driven primarily by record-breaking monthly inflows for fixed income, as investors added a whopping $46.7B …
Global ETP Flows June 2020
Elsewhere, equity flows rose from fairly flat in May to $23B in June, while commodity flows remained positive but dropped to their lowest level of the year with $4.7B of inflows.
Key themes in June:
- Fixed income takes the credit: Record inflows for IG and inflation linkers
- Time to return to EU?: Overseas buying of European equities drives inflows
- The value factor: Value inflows pick back up
Fixed income takes the credit
- June’s record buying in fixed income is attributable to the highest inflow month for IG ETPs since records began. Inflows of $21.6B beat the record set in April by $8.3B, taking total IG inflows in Q2 to $47.1B –a record in its own right. This is particularly remarkable as it follows a fairly flat Q1, where flows netted out at -$0.2B. Q2 flows into IG beat the previous record, set in Q1 2019, by $22.7B. Delving deeper, inflows overwhelmingly went towards US focused IG, with buying in eurozone focused ETPs dropping off after a pick up in April and May.
- Buying in inflation linkers also significantly picked up in June with $4.4B of inflows. This record monthly buying for the exposure beat the previous record of $2.5B set in November 2016, the month of the last US presidential election. We’ve seen interest in linkers start to pick up since mid-April, following record outflows from the exposure in March (-$4.6B), as investors take into account the potential inflationary pressures of the ongoing pandemic. While buying in linkers has largely been focused in US listed products, EMEA-listed buying also picked up to $1.2B in June.
Time to return to EU?
- Inflows into European equities returned with a bang in June, with $3.7B added. June marked the largest inflow month for the exposure since November 2019, and the largest for US listed European equities – which accounted for $3.5B of the total $3.7B – since June 2017.
- US investors in European equities doubled down on the exposure into the start of June with three consecutive weeks of inflows into US-listed products. In EMEA, conviction has been a little more mixed, with flows only turning positive again in the last two weeks of the month.
- EM continued its poor flow run with a further $4.9B of outflows in June, although outflows slowed from $9.4B the month before. The headline outflows mask tentative buying (+$0.8B) into US-listed EM in the second half of the month. The headline outflows also hide the interest in broad EM equity (+$1.1B), which was more than offset by outflows from single country ETPs (-$6.2B).
The value factor
- After a flat inflow month in May, value flows picked up to $1.6B in June, the largest monthly inflows since November 2019. Buying in value started off 2020 in negative territory, as investors expressed a preference for quality and min vol, before turning positive in April postmarket volatility.
- Investors in EMEA-listed value ETPs bought in June for the first time this year. Inflows were fairly well-split between EMEA and US-listed ETPs, with US-listed ETPs taking approximately 2/3 of the flows – in contrast to April’s value inflows, which were driven by buying in exclusively US-listed products.
- In contrast, minimum volatility is now on a four month outflow streak despite elevated market volatility over this period, with a further $1.3B out in June. Quality flows are flat on the month, following $1.1B added in May.