European ETF market flows ended the first quarter on a positive note, continuing the positive trend for 2017. Net New Assets (NNA) in March amounted to EUR9.8bn, i.e. a total of EUR30bn for Q1 2017, a record high quarter…….
Marlène Hassine – Head of ETF Research – Lyxor ETF
Total Assets under Management are up 10% vs. the end of 2016, reaching EUR566bn, including a positive market impact of 4%. Flows into both developed and emerging market equity and fixed income ETFs were positive for the month in a risk-on environment supported by an upbeat macroeconomic backdrop.
Equity ETFs recorded strong inflows at EUR6.3bn. Interestingly, flows were again focused on both developed and emerging markets ETFs amidst a supportive economic environment. Both US and European ETFs benefited from this improved situation with respectively EUR2.3bn and EUR2.2bn of NNA. Significant inflows into global developed equity ETFs also continued to reflect this increased optimism at EUR793M. On the other hand, Asia Pacific equity ETFs saw outflows of EUR494M after reaching a one-year record high last month as the BoJ maintained its interest rate curve control policy. On the emerging markets side, flows continued to be positive with inflows of EUR1.1bn as the Fed maintained a rather dovish tone despite the rate hike. Those flows were mainly concentrated on broad emerging markets equity ETFs. Smart Beta ETFs experienced a strong trend reversal with outflows of EUR108M. Flows into Quality ETFs increased slightly at EUR93M. Flows into Value ETFs (including style + factor value) turned slightly negative at -EUR49M after 5 months of strong inflows.
Fixed income ETF inflows were sustained at EUR2.9bn. Interestingly, they were mainly focused on Emerging debt and investment grade corporate bond ETFs. European govies saw outflows in a volatile rate environment. Flows into emerging debt were once again positive at EUR1.2bn as the search for yield continued. Yet high yield ETFs saw outflows of EUR406M with valuations becoming stretched. Investment grade corporate bond ETF flows reached EUR1.9bn, an 11-month record high. 40% of those flows went to short duration or floating rate bond ETFs in order to reduce interest rate sensitivity. Flows into inflation-linked ETFs slowed down at EUR148M vs. EUR948M in February.
Commodities ETF flows were rather significant at EUR523M vs. EUR209M in February, and were mainly on broad commodity ETFs.