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October’s risk on trade added over USD100bn to ETP AUM

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The return to risk and the market rally across the world added USD107.8bn to US ETP AUM last month, ending at USD1.07 trillion or 7.2% up YTD, according to Deutsche Bank’s US ETF Market Review for October. Global ETP industry assets reached USD1.49 trillion or 6.9% up YTD.

Overall, long-only ETPs gathered USD22.2bn of inflows in October vs. USD3.3bn in Sept. The risk-on trade comeback was marked by a surge in long-only equity ETP inflows which gathered USD18.2bn in the last month. Meanwhile long-only fixed income ETPs had another good month in terms of inflows, harvesting USD4.4bn in new cash; while long-only commodity ETPs remained underwater with outflows of USD0.26bn during the same period. Equity products remained strong with increased interest in US-focused ETPs (+USD13.0bn).

Other hot pockets of growth among equities were found in EM products with broad focus (+USD4.8bn), Dividend (+USD2.8bn), and US Domestic Cyclical sectors (+USD1.2bn).

Within fixed income ETPs, inflows continued to be strong but with a shift in its demographics. Corporates products with +USD3.7bn took the lead over Sovereigns.

There weren’t many highlights within commodity ETPs, although Gold made an attempt to comeback gathering USD0.8bn in inflows.

One of the very few downside trends was experienced by short-term fixed income ETPs (-USD1.0bn) adding strength to the risk-on trade thesis.  

ETFs continued to gain market share against Mutual Funds. ETF AUM was 10.1% of the MF AUM at the end of September, mostly driven by flows growth.

There were 17 new ETPs and 10 new ETNs listed during the previous month. The new products cover five different asset classes, and in most cases offer access to existing markets but with different strategies.

Total monthly turnover decreased by 6.4% to USD1.9 trillion vs. USD2.0 trillion in the previous month. The largest decline was on Equity ETP turnover, which dropped by USD73bn or 4.2% to USD1.68 trillion, followed by Commodity products turnover which fell by USD57.4bn, totalling USD86.9bn at the end of October. Meanwhile, fixed income ETP turnover rose by USD5.0bn to USD85.4bn last month.

US ETP trading made up 33.6% of all US cash equities trading in October, above its 3-Year monthly average of 31.5%.

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