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Strong flows and equity market add USD29bn to US ETP AUM


US ETP flows from all products totalled USD8.2bn of inflows last week up from USD1.1bn the previous week, setting the YTD weekly flow average at +USD1.9bn, according to Deutsche Bank’s latest US ETP market review.

Maybe it was the fact that investors decided to book some profits on the recent Gold surge, or maybe it was the fact that markets expected a repetition of last year’s Jackson Hole speech with its corresponding QE3 announcement. Anyhow the reality is that after 4 weeks of outright risk off trade, long-only ETP flow patterns were significantly reversed during last week (Figure 1). Long only equity ETPs received almost USD11.0bn inflows by the end of Friday, while Gold ETPs experienced the largest weekly outflows (-USD3.5bn) since the recent gold surge began. At the same time Fixed Income ETPs had positive flows of USD829m.

Another hint of potential change in risk appetite was perceived among US-focused sector ETPs grouped by business cycle sensitivity. Cyclical sectors dominated the flows last week with +USD1.3bn for the Global ones and +USD941m for the Domestic ones. However, Defensive sectors remained positive with USD340m of inflows. It is worth to add that the strong inflows received by the cyclical sectors could easily have been in response to the previous week sell-off when Global and Domestic sectors experienced outflows of USD1.5bn and USD2.9bn, respectively.

Despite the magnitude of last week’s risk surge, it is still too soon to call a risk reversal; thus additional cash flow data should confirm whether last week’s flows were a pause in the risk off trade or its reversal.

There were no new listings in the US during last week. Meanwhile, Deutsche Bank AG repurchased three of their ELEMENTS ETNs (BVT, BVL, and BSC).
Total weekly turnover decreased by 5.1% to USD490bn vs. USD516bn in the previous week. The largest decrease was on Equity ETP turnover which fell by USD49.2bn or 10.8% to USD407bn. Fixed Income ETP turnover decreased by USD4.4bn to USD17.5bn last week. Finally, Commodity ETPs products turnover increased by 83.0% totaling USD62.1bn at the end of last Friday.
Driven by strong flows and a rally in the US equity market, US ETP AUM gained USD28.5bn or 2.9% as compared to the previous week and closed at USD1.01 trillion or 1.5% up YTD.

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