ETF flows slow, but fly past annual record….
By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst
European ETF market flows slowed substantially in December 2017 to €4.2bn from €10.4bn in November. It was one of the lowest figures for any month in 2017. Nevertheless, flows still hit an all-time annual high of €93.9bn – a massive €20bn+ ahead of their previous record.
Flows into equities were still positive, but much slower than in previous months as interest in Japanese and European exposures cooled. In fact, we saw the first month of outflows from European equities in 2017. Flows did however surge into US equities with investors lured by the prospects for tax reform and the opportunities it could bring.
Fixed income ETFs trailed some way behind at €867M. Weakness was most apparent in high yield bonds, where outflows of €468M led to their worst month in 2017. Developed market government bond inflows dropped by around a third to €289M from €435M. The one bright spot was inflation-linked bonds, which achieved their second best month of the year by gathering €597M. Elsewhere, outflows of €138M marked a 2017 low point for commodity ETFs, but Smart Beta ETFs held up rather better to gather €155M.
Overall, total European ETF market AUM ended the year 23% higher than when it had started it at €635bn. And, for the first time ever, equity (€63.1bn), fixed income (€27.8bn) and commodity (€3.0bn) ETFs all hit new annual records.