Thu, 07/11/2019 - 16:25
October marked another strong month of inflows for EMEA-listed exchange-traded products (ETPs) with USD15 billion invested, according to a new report from BlackRock.
This is down from the USD20 billion of inflows in September. Flows into equity ETPs moderated to USD8.3 billion in October, down from USD13.8 billion in September. Fixed income gained USD4.9 billion, while inflows into commodity ETPs increased to USD1.6 billion.
European equites gained their largest inflow month this year with USD4.4 billion added in October.
This marked the first time the exposure has received positive inflows in consecutive months since October 2018; investors bought USD4 billion USD7.9 billion of European equities since September.
However, despite the improvement in sentiment towards European equities, net flows this year still remain negative at -USD4 billion.
Investors tempered their buying of USD1 billion of US equities to only USD0.2 billion in October after September’s record inflows (+USD5.3 billion). In spite of lagging European equity inflows in October, year-to- date (YTD) flows into US equities are significantly higher, at USD10 billion YTD.
Investors have continued to sell emerging market (EM) equities for a third consecutive month, with USD0.3 billion of outflows in October. These outflows come despite an apparent de-escalation in global trade tensions, but the October figure does mark a slight improvement from September (-USD1 billion).
Investors continued to favour quality in fixed income in October: investment grade (IG) and rates gained the majority of flows, with +USD1.2 billion and +USD1.8 billion respectively. Investors continued to sell high yield (-USD0.1 billion). Rates and IG have not had a negative flow month so far this year – this 10 month streak has been their longest on record.
EMEA investors have favoured fixed income exposures throughout the year and YTD net flows stand at USD55 billion. In comparison, equity inflows have totalled USD30 billion YTD.
Emerging market debt (EMD) gained another USD0.9 billion in October. Investors favoured local currency ETPs (+USD0.8 billion), while selling hard currency ETPs (-USD0.1 billion). Investors had favoured local currency early this year, but sold the exposure heavily in May. In recent months, this trend has begun to reverse.
Value ETPs gained USD0.4 billion in October – the biggest monthly inflow into the exposure this year. Value only gained inflows of similar magnitude in March 2019, when investors bought USD0.3 billion. Investors sold minimum volatility (min vol) ETPs for a second consecutive month (-USD0.2 billion). Min vol still remains the most popular factor this year with net inflows of USD3.3 billion YTD.
Commodity flows picked up to USD1.6 billion after dropping to USD0.7 billion in September. The majority of inflows were allocated to gold (USD1.2 billion) amid market volatility. Silver flows were flat for October but recovered from the -USD0.1 billion of outflows in September.
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