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Investors extract USD3.7bn from US ETP industry

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US exchange-traded product flows added to the market’s bearish flavour in the week ending 19 November, with USD3.7bn being extracted from the industry versus USD5.5bn of inflows on the previous week.

According to Deutsche Bank, the weekly average ETP flows stand at USD2.2bn year to date.

The QE2 criticism that started on 12 November fuelled the equity outflows trend into last week. US equity ETPs experienced USD3.5bn of outflows versus USD4.5bn of inflows the previous week.

As of last Thursday close, long US and long emerging market equity ETPs had recorded outflows for USD6.3bn and USD0.9bn respectively. However the equity markets were able to correct some losses helped by positive developments on the other side of the Atlantic, releasing significant pressure on the US and pulling up emerging markets as well. Long US and long emerging market equity ETPs recovered USD3.1bn and USD0.4bn in flows on Friday, respectively.

Fixed income ETPs experienced USD910m of outflows, an event seldom seen in the past two years. This was preceded by almost-flat inflows of USD5m on the previous week, suggesting that this might be a bit more than just a one-week isolated event.

Investors poured USD238m into active fixed income ETPs. Active debt oriented products have gathered USD1.2bn since their recent inception. Among the seven available products, enhanced short duration and emerging markets debt in local currency themes have been the favourites.

Commodity ETPs gathered USD544m in fresh money during the week. With winter right around the corner, energy related ETPs took the first place prize back home. Crude oil and natural gas ETPs received USD295m and USD102m, respectively.

Within the precious metals space, silver (USD129m), platinum (USD33m) and PM baskets (USD28m) received inflows, whereas gold registered outflows of USD39m.

Average daily turnover decreased by 1.4 per cent and totalled USD65bn at the end of the week. Fixed income ETPs turnover recorded the largest absolute increase (USD250m or 9.3 per cent), while equity ETPs turnover experienced the largest absolute decrease (USD1.2bn or -2.1 per cent).

US ETPs AUM decreased by 0.8 per cent, backing down to USD947bn at the end of the week. This pullback was mainly driven by outflows from equity and fixed income ETPs. Year to date US ETPs AUM has increased USD166bn or 21.2 per cent.

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