March sees record inflows again in global ETPs, reports BlackRock
March 2021 was another record setting month according to the latest BlackRock global ETP flows report, the third in the past six months, with net flows rising to USD133.4 billion, against USD131.8 billion in February.
BlackRock writes that March flows were driven by record buying in equity ETPs (USD117.9 billion), which took Q1 equity ETP flows to USD283.5 billion – eclipsing the previous record set in Q4 2020 (USD202.2 billion). US equity inflows reached new highs in March (USD75.6 billion), with quarterly rebalancing leading to significant US-listed flows in particular.
The march to sustainable continued, BlackRock reports, with flows on an even steeper trajectory than last year: Q1 flows hit USD43.8 billion – over 50 per cent of 2020’s total (USD81.9 billion) according to the firm.
“This was despite sustainable ETP flows falling to USD10.3 billion in March, vs. a record USD17.3 billion in February. EMEA-listed flows have accounted for 70 per cent of the YTD flows (compared to c.60 per cent in 2020),” the firm says.
Key themes in March included a cyclical tilt, with equity sector ETP flows remaining strong in March, albeit with a distinct shift to more cyclical exposures. Fixed income was relatively muted, with USD17 billion added in March –the lowest inflows since market volatility in March 2020.
Equity sector ETP flows remained strong in March, albeit with a distinct shift to more cyclical exposures. Financials (USD6.6 billion) and energy (a record USD6.3 billion) were the most popular, the firm says, tech flows, however, fell from a record USD13.4 billion in February to USD1.4 billion in March – the lowest since September 2020.
Despite the fall in global tech flows in March, Q1 was a record quarter for the sector (USD23.4 billion, up from USD17.3 billion in Q4 2020).
The increased use of sector ETPs as a way to incorporate selectivity within equity allocations also led to record quarters for financials (USD22.4 billion), energy (USD14.2 billion), industrials (USD8.1 billion) and materials (USD5.2 billion), the firm writes.
The cyclical tilt was also evident in factor flows, according to BlackRock. Value ETPs gained USD7.6 billion in March –the largest inflows for any factor on record –solidifying a record quarter for value buying (USD11.4 billion). Momentum was the next most popular (USD1.9 billion). Outflows from quality moderated in March, but the factor posted its first outflow quarter (-USD2.6 billion) since Q2 2015.
Fixed income flows saw USD17 billion added in March – the lowest inflows since market volatility in March 2020. Investors started to allocate back to rates ETPs for the first time since October 2020, with USD5.3 billion of inflows (largely into US-listed ETPs and partly rebalancing related), making it the most popular FI exposure in March and taking Q1 rates inflows to USD3.6 billion – the first positive quarter since Q2 2020, BlackRock says.
The lack of conviction in credit continued in March, with outflows from investment grade (IG) and high yield (HY), according to the firm. IG selling was driven by cUSD3 billion of EMEA-listed outflows. EMEA-listed emerging market debt ETPs also registered outflows for the first time since April 2020 (-USD0.5 billion), amid marginal global inflows. Inflation-linked ETPs gained a record USD10.4 billion in Q1 2021, amid rising inflation expectations.