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US ETPs see inflows of USD1.7bn

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Total US ETP flows from all products (long+short) registered USD1.7bn of inflows during last week vs USD434m of inflows the previous week, setting the YTD weekly flows average at +USD1.9bn.

Defensive flows kept receiving healthy inflows during last week as investors sail choppy seas, and helped long only ETPs to gather USD1.5bn of inflows in spite of the equity market downturn. Within long only ETPs, equity products experienced outflows of USD625m, while Fixed Income and Commodity ETPs registered USD1.2bn and USD928m of inflows, respectively (Figure 1).

In general, equity defensive sectors (+USD988m), fixed income investment grade (+USD637m), commodity gold (+USD619m), and equity dividend (+USD200m) remain the favourite defensive trades during last week.

A noteworthy point was the unusually large inflow to the US Healthcare sector ETPs (USD796m) during last week after bottoming at USD1.3bn of outflows on a QTD basis last Tuesday. We believe that the current underlying trend governing the equity market (i.e. risk off trade) and the relative valuations within the main three defensive sector ETFs (XLP: Cons. Staples, XLU: Utilities, and XLV: Healthcare) suggest that last week’s flows could be the beginning of a sector rotation within defensives.

There were four new ETFs and 12 new ETNs listed on NYSE Arca during the previous week. The new products provide additional investment vehicles to play volatile markets by taking different views on volatility and market neutral strategies.
 
Total weekly turnover decreased by 13.8% to USD354bn vs. USD411bn in the previous week. The largest decrease was on Equity ETP turnover, which fell by USD55bn or 15.3% to USD305bn. Fixed Income ETP turnover decreased by USD4bn to USD14.3bn last week. Finally, Commodity ETPs products turnover kept on the same level, totalling USD29.8bn at the end of last Friday.
 
The equity markets downturn dragged ETP AUM along the way in spite of inflows to Commodity and Fixed Income products. US ETP AUM lost USD15.8bn or 1.5% compared to the previous week and closed at USD1.007 trillion or 1.2% up YTD.

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