BlackRock ETP Landscape: Global flows into ETPs rebounded to $122B in June, up from $97.3B in May, making it the third-highest inflow month of the year (and fourth highest on record).
Global ETP Flows June 2021
The pickup in flows was driven by an increase in equity ETP buying ($101.5B), while fixed income flows dropped slightly ($20.8B).
The first half of the year has been characterised by risk-on sentiment, and this has played out in global ETP flows. The $519B added to equity ETPs globally puts 2021 on track to be a record –and has already surpassed all previous annual flows into equity ETPs.
Key themes in June:
US flows pick up
- Flows into US equity ETPs increased 2.5x vs. May’s flows, with $71.7B of inflows in June –the second-highest month on record (behind the mammoth $75.7B added in March this year, and ahead of the $61.7B added in February). As is usually the case for flows into US equity exposures, buying was predominantly focused in US-listed ETPs, although EMEA-listed US equity flows also increased from $2.3B in May to $3.4B in June.
- European equities continued to be popular, with a further $6.2B of inflows in June, albeit slightly down from the $8.7B added in May. International demand remained strong in June: flows into US-listed European equity ETPs ($4.2B) outpaced EMEA-listed European equity buying ($1.9B) for the third consecutive month. At the global level, European equity ETPs have gathered net inflows in every month since November –making this the longest inflow streak since November 2016-November 2017. The $24.4B added to European equity ETPs YTD also puts 2021 on track to be the largest inflow year since 2017.
- Buying in US ($3.8B) and EMEA-listed ($1.7B) emerging market (EM) equity ETPs also picked up in June –almost entirely into broad EM exposures –but was largely offset by selling out of single country APAC-listed products, resulting in $0.5B of global net inflows for the month.
A tilt to quality
- Within equity flows, a tilt to quality started to come through at a sector and factor level. Tech reversed the $1.7B of outflows in May with $2.4B added in June –the highest inflow month since the record $13.4B added in March. Meanwhile, financials flows dropped to $2.9B –the lowest since October 2020, and flows into industrials sector exposures fell into negative territory for a second consecutive month (-$1.8B).
- More and more investors are using sector ETPs as a way to implement granular views, with $108.1B into sector exposures globally YTD vs. $111.8B for 2020 as a whole. Quality factor flows hit $1.6B in June –the highest level since November 2019 –while value flows fell to their lowest level in four months ($2.2B).
Building momentum in spread assets
- Fixed income flows in June followed a similar pattern to May, despite dropping at the headline level to $20.8B. Global flows into rates exposures picked up to $5.9B –the highest monthly inflows since March 2020 –driven by buying in US Treasury ETPs.
- In credit, investment grade (IG) flows increased to $2.2B in June, leaving Q2 flows at $9.4B –the highest level since Q3 2020. Sentiment towards high yield (HY) ETPs fluctuated over the quarter, with two months of inflows followed by $0.3B of outflows in June –the third month of selling so far this year. US-listed HY recorded outflows in June, while flows into EMEA-listed products remained positive ($0.2B), albeit below the previous month.
- Emerging market debt (EMD) remained popular across listing regions, with $2.1B added to EMD ETPs globally in June, slightly down from $2.4B in May. China bonds continued to be popular: buying in China bond ETPs hit $1.1B in June, up slightly from May’s inflow figure.
- Global flows into fixed income ETPs stood at $139B at the end of H1 –ahead of this time last year, when $126B had been added. Inflation-linked ETPs have been a key focus, with $21.6B added during the first half of 2021 –surpassing the record full-year total in 2020 ($17.3B).
Sustainable ticks up
- Flows into US and EMEA-listed sustainable ETPs increased to $8.8B in June, up from May’s nine-month low ($5.5B), but shy of the record $18B added back in February amid broad equity inflows.
- ESG best-in-class funds accounted for just under half of the $5.6B added to EMEA-listed sustainable products in June, led by equity exposures. Best-in-class versions of Japanese equity exposures recorded $0.6B of net inflows –their highest on record.
- Flows into US-listed sustainable ETPs totalled $3.1B in June. ESG-optimised strategies were popular, while environmental strategies also made a resurgence as the second-most popular sustainable exposure, recording $0.6B of net inflows in June. This was the highest level since January –driven primarily by buying into clean energy exposures –and a recovery from the $0.2B of outflows in May.