Amundi comments on global ETF recovery in May
Amundi’s latest ETF flows report for the European market finds that global ETFs continued their April recovery into May, with total inflows of EUR37.3 billion.
The firm writes that investors continue to shift from equity to fixed income, with equity ETFs seeing outflows of EUR4.2 billion, while fixed income ETFs gained EUR33.5 billion. However, North American equity ETFs bucked the trend with inflows of EUR566 million versus EUR752 million of outflows for European-registered equity ETFs.
Commodities also continued to see strong demand with global inflows of EUR7.47 billion and EUR497 million for European-registered ETFs.
Once again, corporate bonds accounted for the majority – EUR4.7 billion – of the total in-flows of EUR5.4 billion into European-registered fixed-income ETFs. Year-to-date flows into this asset class have recovered to pre-crisis levels.
Amundi writes: “While investor appetite for corporate bonds was strong last month, it was focused principally on investment-grade debt. In the last few weeks, investors have started to allocate again to high-yield. Given the ongoing economic risks associated with the Covid-19 crisis, this is perhaps surprising but the strong correction in high-yield corporate bonds has made valuation and the yield-to-maturity irresistible.”
The firm also notes that investors selected investment-grade bonds in Europe while their appetite for US investment grade was equally matched by their fondness for US high-yield.
Flows into investment-grade Eurozone bonds were EUR1.3 billion while only EUR183 million was invested into high-yield in this region. In contrast, US investment grade bonds attracted EUR976 million while investors added EUR950 million to US high-yield policies announced to support businesses provided further confidence in this asset class.
In terms of equities, overall, investors redeemed funds from European-registered equity ETFs but certain strategies attracted capital. The continued recovery in the US stock market brought investors back to this region with European-registered North American ETF in-flows of EUR566 million.
Investors continued to withdraw assets from ETFs which tracked main indices, allocating instead to certain sector ETFs. Healthcare and IT trackers once again saw asset growth as did those tracking the materials, financials and consumer staples. These gained EUR827 million, EUR532 million, EUR239 million, EUR225 million and EUR156 million respectively.
Amundi writes that in contrast, real estate funds suffered redemptions. Investors continue to allocate assets to those sectors that should do well in the current crisis while taking money out of industries which will struggle. Real estate is being negatively impacted by lockdowns and questions over the long-term viability of shops and offices.
Equity ETFs with a tilt towards companies with a high ESG score continued to attract assets with in-flows of EUR1.6 billion, the firm notes.
In terms of commodities, Amundi writes that the recovery in commodities has been driven by flows into gold ETFs. “In times of uncertainty, gold becomes a safe haven and it is proving particularly popular during the Covid-19 crisis,” the firm writes, quoting the World Gold Council who wrote: “Year-to-date, inflows (623t, USD33.7 billion) now exceed the highest level of annual inflows (591t) seen in 2009.”