Fri, 04/07/2014 - 10:57
Global exchange-traded products have seen inflows of USD123.9bn year-to-date, an increase of 25 per cent compared with the first half of last year.
This followed a quarter two total of USD90.6bn that exceeded any quarter in the past five years.
Fixed income, European equity, Japanese equity and broad-based global/global ex-US equity have been strong contributors so far this year.
US equity and EM equity flows have improved after a slow start to the year.
June inflows of USD36.3bn included the best month of the year for equities with USD36.8bn, driven by US, European and emerging markets equity funds.
US equity ETP flows surged to USD21.0bn led by large cap and sector funds, while European equity added USD4.0bn in response to monetary policy easing by the ECB.
EM equity funds brought in USD7.7bn during June to move back into positive territory on the year, helped by continued momentum for broad EM funds, a more stable outlook for China’s economy, and ongoing strength for Taiwanese stocks.
Fixed income ETPs slowed to -USD0.4bn as investors anticipated higher rates despite a still-accommodative Fed, with Treasury outflows offsetting broad/aggregate US and emerging markets debt inflows
Ursula Marchioni, head of ETP research EMEA at iShares, says: “Q2 was the best quarter we have seen in the last five years. Year-to-date global ETP flows reached USD123.9bn, up 25 per cent from the first half of last year.
“June was the strongest month since the summer of 2013 with global ETPs attracting more than USD36bn of inflows. Investors piled into US equity ETPs with USD21.0bn and European equity maintained its pace capturing USD4.0bn. Among single-country funds, Italian and Spanish exposures gathered USD0.7bn combined, boosting the YTD total to USD4.3bn.
“In European domiciled ETPs, June saw USD6.7bn in flows boosted by the ECB easing action and the broad recovery of investor demand in Europe. These European flows marked 12 consecutive months of net new flows for the region.
“June also saw emerging markets exposures rebound strongly. With USD7.7bn of inflows this month and USD16.1bn in total this quarter, emerging markets equity ETP flows turned positive for the year. Single country funds led the way in June with USD5.0bn in flows going to China, Taiwan and India. India flows were supported by continued positive sentiment around reforms following Mr. Modi’s election victory. Taiwan’s high dividend market is well positioned for the continued hunt for yield and China witnessed a turnaround in data that follows short-term easing measures from the authorities. Global emerging market debt has also continued to benefit from investors’ looking for yield with USD1.2bn of inflows in June, the third month in a row where global ETP flows with EM debt exposures surpassed USD1bn.”
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