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US ETP flows suggest fear trade during November, says Deutsche Bank


Overall, US long-only ETPs gathered USD1.2bn of inflows in November vs +USD22.2bn in October, according to the latest US ETF Market Monthly Review from Deutsche Bank

Investors fled from equities with outflows of USD6.8bn from long-only ETPs, while pouring USD4.9bn and USD3.1bn into fixed income and commodity long-only ETPs in November.

Safe-haven segments were favoured by the fear-driven trade of November adding significant inflows to investment grade debt (+USD4.0bn), gold (+USD3.6bn), and equity dividend (+USD2.0bn) products.

Equity outflows were across the board with US-focused, DM ex-US, and EM long-only ETPs recording -USD5.3bn, -USD0.8bn, and -USD0.9bn, respectively.

Among equity sectors, Global and Domestic Cyclicals ETPs recorded outflows of USD1.3bn and USD1.2bn, respectively; while Defensives had inflows of USD0.5bn. In terms of size allocations, Large Caps had USD8.7bn in outflows.

Within fixed income long-only ETPs, inflows continued to be strong and almost evenly distributed among Sovereigns, broad exposure, and Corporates with about USD1.3bn in inflows to each of them, with a clear tilt towards investment grade.

ETFs continued to grow at a much faster pace than Mutual Funds. YTD at the end of October, ETF inflows contributed 10.9% to the ETF AUM growth, while only 0.5% of the Mutual Fund AUM growth was attributable to new cash.

There were 13 new ETPs and 4 new ETNs listed during the previous month. The new products cover four different asset classes, and in most cases offer access to new markets, themes and strategies.

Total monthly turnover decreased by 13.4% to USD1.6 trillion vs USD1.9 trillion in the previous month.

US ETP trading made up 33.3% of all US cash equities trading in November, down from its recent peak of 37.5% in August, but still above its 3-Year monthly average of 31.4%.

The largest decline was on Equity ETP turnover, which dropped by USD232bn or 13.8% to USD1.45 trillion, followed by Fixed Income products turnover which fell by USD15.8bn, totalling USD69.7bn at the end of November. Meanwhile, Commodity ETP turnover rose by USD1.6bn to USD88.5bn last month.

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