BlackRock reports June ETP inflows into US ETPs as second highest month on record
BlackRock’s global ETP flows figures for June 2021 show that flows into US equity ETPs increased 2.5x vs. May’s flows, with USD71.7 billion of inflows in June – the second-highest month on record, behind the mammoth USD75.7 billion added in March this year, and ahead of the USD61.7 billion added in February.
BlackRock writes: “As is usually the case for flows into US equity exposures, buying was predominantly focused in US-listed ETPs, although EMEA-listed US equity flows also increased from USD2.3 billion in May to USD3.4 billion in June.”
The firm found that European equities continued to be popular, with a further USD6.2 billion of inflows in June, albeit slightly down from the USD8.7 billion added in May. International demand remained strong in June: flows into US-listed European equity ETPs (USD4.2 billion) outpaced EMEA-listed European equity buying (USD1.9 billion) for the third consecutive month.
At the global level, European equity ETPs have gathered net inflows in every month since November – making this the longest inflow streak since November 2016 - November 2017, BlackRock writes. The USD24.4 billion added to European equity ETPs YTD also puts 2021 on track to be the largest inflow year since 2017.
Buying in US (USD3.8 billion) and EMEA-listed (USD1.7 billion) emerging market (EM) equity ETPs also picked up in June – almost entirely into broad EM exposures – but was largely offset by selling out of single country APAC-listed products, resulting in USD0.5 billion of global net inflows for the month.
“Within equity flows, a tilt to quality started to come through at a sector and factor level,” BlackRock writes as Tech reversed the USD1.7 billion of outflows in May with USD2.4 billion added in June – the highest inflow month since the record USD13.4 billion added in March.
Meanwhile, financials flows dropped to USD2.9 billion – the lowest since October 2020, and flows into industrials sector exposures fell into negative territory for a second consecutive month (-USD1.8 billion).
“More and more investors are using sector ETPs as a way to implement granular views, with USD108.1 billion into sector exposures globally YTD vs. USD111.8 billion for 2020 as a whole,” BlackRock writes.
Quality factor flows hit USD1.6 billion in June – the highest level since November 2019 – while value flows fell to their lowest level in four months (USD2.2 billion).
Fixed income flows in June followed a similar pattern to May, despite dropping at the headline level to USD20.8 billion. Global flows into rates exposures picked up to USD5.9 billion – the highest monthly inflows since March 2020 – driven by buying in US Treasury ETPs.
In credit, investment grade (IG) flows increased to USD2.2 billion in June, leaving Q2 flows at USD9.4 billion – the highest level since Q3 2020. Sentiment towards high yield (HY) ETPs fluctuated over the quarter, with two months of inflows followed by USD0.3 billion of outflows in June – the third month of selling so far this year. US-listed HY recorded outflows in June, while flows into EMEA-listed products remained positive (USD0.2 billion), albeit below the previous month.
Emerging market debt (EMD) remained popular across listing regions, with USD2.1billion added to EMD ETPs globally in June, slightly down from USD2.4 billion in May. China bonds continued to be popular: buying in China bond ETPs hit USD1.1 billion in June, up slightly from May’s inflow figure. Global flows into fixed income ETPs stood at USD139 billion at the end of H1 – ahead of this time last year, when USD126 billion had been added. Inflation-linked ETPs have been a key focus, with USD21.6 billion added during the first half of 2021 – surpassing the record full-year total in 2020 (USD17.3 billion).
Flows into US and EMEA-listed sustainable ETPs increased to USD8.8 billion in June, up from May’s nine-month low (USD5.5 billion), but shy of the record USD18 billion added back in February amid broad equity inflows, BlackRock writes.
ESG best-in-class funds accounted for just under half of the USD5.6 billion added to EMEA-listed sustainable products in June, led by equity exposures. Best-in-class versions of Japanese equity exposures recorded USD0.6 billion of net inflows – their highest on record.
Flows into US-listed sustainable ETPs totalled USD3.1 billion in June. ESG-optimised strategies were popular, while environmental strategies also made a resurgence as the second-most popular sustainable exposure, recording USD0.6 billion of net inflows in June. This was the highest level since January – driven primarily by buying into clean energy exposures – and a recovery from the USD0.2 billion of outflows in May.