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European equity ETFs continue to attract strong interest

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Global exchange-traded fund cash flow patterns for the week that finished on 14 September signal an improvement in equity market sentiment, according to Deutsche Bank.

US domiciled ETFs received EUR14.2bn of inflows, while European domiciled ETFs received inflows of EUR1.4bn.

Equity ETFs received the lion’s share on both sides of the Atlantic, with US domiciled ETFs receiving over 90 per cent (USD12.8bn) of inflows, while European domiciled ETFs received comparable interest (79 per cent, EUR1.1bn).

In Europe, European developed markets (DM) diversified equity benchmarks received 75 per cent of the week’s total equity ETF cash flows (EUR829.5m). This is a continuation of a trend noted in Deutsche Bank’s August monthly report published on 13 September and titled Quest for yield: Dividends and corporate bond credit at the forefront. During August diversified European DM equity benchmarks received inflows of EUR702m. Year-to-date, ETFs that are benchmarked to European DM diversified indices have received EUR1.8bn.

Last week’s European equity cash flows were strongly tilted towards EuroStoxx50 benchmarked ETFs (EUR493m), while Stoxx 600 (EUR194m) and MSCI Europe (EUR127m) also received healthy interest. On the outflows front, DAX benchmarked ETFs continued to experience negative pressure and registered EUR149m of outflows, bringing their YTD outflows to over a billion (EUR1.1bn).

The European broad equity benchmarked ETF flow gains come on the back of positive market gains over the past week. The EuroStoxx 50 is up 15.7 per cent YTD, up 5.0 per cent in August and up 2.2 per cent over the week that finished on September 14. The Stoxx 600 and the MSCI Europe indices have seen similar gains.

Fixed income ETFs received EUR260m of net inflows over the past week, the majority of which (EUR303m) went to corporate bond benchmarked ETFs. High yield continued its run and attracted EUR176m while investment grade benchmarked corporate ETFs received EUR127m. US domiciled fixed income ETFs also received healthy flows totalling USD1.4bn.

European domiciled commodity ETPs received EUR348m for the week, with gold ETPs gaining the lion’s share EUR251m. This brings YTD gold inflows to EUR3.9bn, making by far the most popular commodity with ETP investors. The price of gold (USD/oz) rose by 2.1 per cent over the past week, while it is up 12.5 per cent YTD.
 

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