BlackRock’s April ETP report finds broad recovery
BlackRock’s iShares report for April reveals inflows into global ETPs increased to USD68.6 billion in April amid a broad recovery in risk sentiment, as a return to positive buying in fixed income offset a drop off in equity buying.
Commodity ETP flows built upon last month’s record inflows to notch up a huge USD21.4 billion, surpassing the previous monthly inflow record by almost USD10 billion.
The firm notes that key themes in April were record buying in investment grade (IG) and high yield (HY); unprecedented flows for the healthcare sector and records upon records for commodities.
The firm writes that following on from the positive flow momentum in the last two weeks of March, inflows into credit in April continued to set monthly inflow records for both HY (+USD8.4 billion) and IG (+USD13.3 billion).
Inflows into IG surpassed the previous monthly record set in January 2019, and more than made up for the USD7.1 billion of outflows in March, BlackRock says. Buying was overwhelmingly into US IG, which made up 72 per cent of inflows into IG, while eurozone IG inflows accounted for USD3.3 billion.
In HY, the US tilt is even more prevalent, the firm says. “While eurozone HY flows are still lagging, with inflows into US HY accounting for 96 per cent of the record USD8.4 billion added in April. While eurozone HY inflows returned to positive territory with USD0.4 billion added in April, we haven’t seen a return of the USD2.3 billion that flowed out during volatile markets.”
At a sector level, BlackRock reports that healthcare ETPs notched up USD7.3 billion of inflows in April, the largest monthly inflow on record, beating the previous record set in November 2016 when President Trump was elected (+USD3.6 billion).
“These inflows come amid increasing focus on the sector in the current pandemic, as attention on medical device production and pharmaceutical innovation has offered investors two rationales for investing in the sector. Buying in healthcare was overwhelmingly into US equity healthcare ETPs (+USD6.1 billion), although buying in European healthcare did hit USD0.5 billion (yet another record).”
The firm notes that despite the largest weekly inflow into US equity ETPs since September 2019 (+USD17.7 billion) at the start of the month, flows into the exposure dropped off into the end of the month as investors de-risked out of equity ETPs on the whole, leaving the figure at USD18.3 billion.
BlackRock notes that outflows continued from EM equities (-USD9.8 billion), which have now been sold for eight out of the past 12 months.
“The outflows were across the board, in contrast to March, when buying in single country ETPs – particularly those exposed to Asia – offset selling out of broad EM equity products, leading to muted net outflows of USD1.1 billion. A reversal of sentiment led to flows out of China, Brazil and South Korean equity ETPs, while selling out of broad EM equity slowed but remained negative at -USD4.8 billion.
Turning to oil, BlackRock writes that record buying of commodity ETPs in April can almost entirely be split by inflows into gold and crude oil ETPs, both of which hit their highest monthly inflows on record.
Inflows into US and APAC-listed crude oil ETPs made up the majority of inflows, increasing 1.5x and 1.9x on March’s flows respectively. Buying in EMEA-listed products rose substantially to USD2.3 billion in April, an increase of 3.3x March’s figure.
Gold flows similarly shone with USD9.2 billion added in April, up from USD7.7 billion in March, BlackRock writes. Buying was consistent across the whole month. While March flows were tilted towards EMEA-listed ETPs, 80 per cent of the buying in gold in April went into US-listed products (+USD7.3 billion). Buying in EMEA-listed ETPs fell to USD1.5 billion, following the bumper USD4.2 billion added in March.