BlackRock’s ETP Landscape report for July shows that global ETP flows registered USD55.2 billion, a record month for 2016. The flows were supported by relatively resilient markets and lower-than-expected signs of stress in the immediate aftermaths of the Brexit vote, the firm writes.
US equity inflows reached USD32.0 billion, the highest since December 2014, with continued strength in dividend-weighted and minimum volatility strategies with USD4.8 billion and USD1.4 billion, respectively. Fixed income flows accelerated to USD13.9 billion driven by investment grade and high yield corporate bonds with USD7.0 billion combined as investors showed preference for high-yielding categories. The largest flow volumes in July were into both Emerging Market equities (USD8.2 billion) and Emerging Market debt (USD3.9 billion).
Ursula Marchioni, Chief Strategist for iShares EMEA, says: “In July, investors didn't panic or try to de-risk portfolios, but rather capitalised on some buying opportunities and continued to search for yield in a low return environment which is even more likely to continue.
“In a record month for global ETPs, US equities and emerging market debt and equity were the flavours of the month. There were a number of records and milestones across different asset classes during the month, with minimum volatility funds surpassing USD50 billion in assets and broad emerging market equity as well as emerging market debt funds both reaching new monthly highs.
“Emerging markets were the standout for the month, with USD11.2 billion of flows into debt and equities products. Although counter-intuitive, emerging markets seem to have earned a safe haven status due to the perceived distance from volatility driven by developed markets, combined with a view that market conditions will unlikely bring Fed tightening and a strong Dollar anytime soon.
“Equity funds celebrated their best month for the year so far climbing to USD34.1 billion following a sharp recovery in US equity flows. Fixed income funds remain on track for a record year, having rebounded by nearly USD14 billion. US corporates were the biggest contributor across fixed income flows for the month, while US Treasuries were one of the only fixed income exposures to witness net outflows.
“Meanwhile, broad market commodity funds added USD1.3 billion in flows, nearly doubling the year-to-date total and just shy of its monthly record in February 2011. Gold funds drew in USD3.2 billion as investors continued to seek a counterweight to negative rates and heightened volatility. Year-to-date flows into gold ETPs have climbed to USD25.1 billion, higher than 2009’s record full-year flows of USD17 billion.”