BlackRock ETP Landscape: March global flows: Marching to new records
Global ETP Flows March 2021
Global ETP flows set another record in March, for the third time in the past six months: net flows rose to $133.4B, vs. $131.8B in February. March flows were driven by record buying in equity ETPs ($117.9B), which took Q1 equity ETP flows to $283.5B – eclipsing the previous record set in Q4 2020 ($202.2B). US equity inflows reached new highs in March ($75.6B), with quarterly rebalancing leading to significant US-listed flows in particular.
The march to sustainable continued, with flows on an even steeper trajectory than last year: Q1 flows hit $43.8B – over 50% of 2020’s total ($81.9B). This was despite sustainable ETP flows falling to $10.3B in March, vs. a record $17.3B in February. EMEA-listed flows have accounted for 70% of the YTD flows (compared to c.60% in 2020).
A cyclical tilt
Equity sector ETP flows remained strong in March, albeit with a distinct shift to more cyclical exposures. Financials ($6.6B) and energy (a record $6.3B) were the most popular; tech flows, however, fell from a record $13.4B in February to $1.4B in March – the lowest since September 2020.
Despite the fall in global tech flows in March, Q1 was a record quarter for the sector ($23.4B, up from $17.3B in Q4 2020). The increased use of sector ETPs as a way to incorporate selectivity within equity allocations also led to record quarters for financials ($22.4B), energy ($14.2B), industrials ($8.1B) and materials ($5.2B).
The cyclical tilt was also evident in factor flows: value ETPs gained $7.6B in March – the largest inflows for any factor on record – solidifying a record quarter for value buying ($11.4B). Momentum was the next most popular ($1.9B).
Outflows from quality moderated in March, but the factor posted its first outflow quarter (-$2.6B) since Q2 2015.
Muted fixed income
Fixed income flows were relatively muted, with $17B added in March – the lowest inflows since market volatility in March 2020. Investors started to allocate back to rates ETPs for the first time since October 2020, with $5.3B of inflows (largely into US-listed ETPs and partly rebalancing related), making it the most popular FI exposure in March and taking Q1 rates inflows to $3.6B – the first positive quarter since Q2 2020.
The lack of conviction in credit continued in March, with outflows from investment grade (IG) and high yield (HY). IG selling was driven by c.$3B of EMEA-listed outflows. EMEA-listed emerging market debt ETPs also registered outflows for the first time since April 2020 (-$0.5B), amid marginal global inflows. Inflation-linked ETPs gained a record
$10.4B in Q1 2021, amid rising inflation expectations.