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BlackRock reports investors using ETPs to position for Trump presidency

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November’s BlackRock ETP Landscape report reveals that US equities gathered USD52.2 billion on the back of the US equity rally following the US election outcome.

US financials, industrials and health care gathered USD8.2 billion, USD3.5 billion and USD2 billion respectively. Broad European equity exposures saw inflows of USD1.2 billion. European health care, financials and oil & gas equities gathered a combined USD500 million in flow.

BlackRock writes that emerging market equities saw USD3.2 billion in outflows and China and Indian equity exposures saw outflows of USD845 million and USD217 million respectively. US TIPS and developed market high yield fixed income exposure saw inflows of USD2.4 billion and USD1.4 billion respectively, and developed market debt saw inflows of USD2.8 billion while EM debt saw outflows of USD3.5 billion. The firm reports that crude oil has gathered USD730 million in the month of November while gold exposures saw outflows of USD4.5 billion.

Ursula Marchioni, Chief Strategist for iShares EMEA, says: “The ETP trends seen in November suggest investors used the products to position their portfolios for the Trump presidency.

“The results triggered inflows into US equity ETFs on expectations of President-elect Trump’s pro-growth policies. The inflows largely went into broad large cap exposures, as well as financials which benefited from yield curve steepening and expectations of lower regulation under Trump’s administration. Health care, pharmaceuticals and biotechnology exposures also saw net positive flows. US small cap and US value exposures were also in favour, benefiting from the reflationary trend.

“Flows into Japanese equity exposures reached USD4 billion supported by the recent weakening of the yen against the US dollar after the US elections.
“Emerging market debt ETPs, specifically government debt and sovereign bond exposures, saw outflows driven by Trump’s anti-trade rhetoric and stronger US dollar. In the US, treasuries saw large outflows on the back of a reflation-driven back up in yields while TIPS exposures gathered flows in anticipation of ongoing inflationary pressures.

“Crude oil ETPs saw inflows as investors expected increased US infrastructure spending. Gold, on the other hand, saw outflows of USD4.5 billion driven by broadly resilient risk sentiment following the US election and back-up in yields following the outcome.”

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