Global flows of USD10.6bn in February ensured the strongest two-month start on record for equity exchange-traded funds, according BlackRock’s latest ETP Landscape report.
Developed market equity ETPs continued to exhibit strong momentum in February, gathering USD13.0bn. This included USD7.3bn in non-US exposures.
Sector funds added USD4.7bn led by real estate with USD1.5bn, under the backdrop of improving economic indicators in the US housing markets.
On the heels of a strong risk rally in January, continued purchasing in February brought YTD equity ETP flows to USD47.1bn, the strongest Jan-Feb total on record. The S&P 500 index came close to levels last seen in 2007, even as the US sequester budget negotiations wore on, and some concerns persisted over the durability of the US Federal Reserve’s asset purchase program.
Emerging markets equity inflows slowed compared to January and high yield fixed income funds experienced outflows as modest yield compression continued.
Dividend focused ETPs gathered USD1.6bn in February. The continued appetite for yield is even more evident when adding the USD1.5bn from real estate and USD0.7bn from preferred stock ETPs.
Investors continued to move toward the short end of the fixed income yield curve. February inflows into short maturity fixed income ETPs (including ultra-short term, short-term and floating rate) totalled USD4.0bn while all other maturities saw collective outflows of USD1.3bn.
Set against the backdrop of rising Equities, a strengthening US dollar, and US Treasury bonds yield holding below two per cent, the investment appetite for gold has waned. Gold ETP outflows totalled USD5.6bn and have now reached USD6.8bn YTD.