The BlackRock ETP Landscape report for May finds that global ETP flows of USD45 billion during May pushed assets past the USD4 trillion milestone.
Industry assets crossed USD4 trillion after first reaching USD3 trillion just two years earlier, with organic growth rising from 11 per cent in the first year to 18 per cent in the second year.
Non-US equity funds experienced record flows of USD30.4 billion for the month, including broad Europe accelerating to USD9.3 billion following the French election, and broad EM reaching a nine-month high of USD5.7 billion.
Fixed income remained on track for a second consecutive record year by gathering another USD14.3 billion, led by investment grade flows of USD6.8 billion (the best month ever) and followed by EM debt with USD2.1 billion.
Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, says there are five key stories behind the European ETP flows in May 2017:
1. Tango in Paris
“European equities’ had their biggest month since 2015. The French election has seemingly assuaged some concerns around European political risks, paving the way for allocations to European assets.”
2. Factoring in flows to value
“Over the last 12 months, there has been a clear rotation out of the low volatility factor towards the value factor. The US election was seemingly the catalyst – since October there have been inflows of USD3.8 billion into European-domiciled value ETFs.”
3. EMphatic run for EM equity ETFs
“2017 has been a very strong period for EM ETFs across all domiciles. The current five straight months of inflows has been the best monthly run since January 2013 when a run of seven straight months came to an end. Investors have seemingly focused on improving EM fundamentals rather than the protectionist rhetoric that characterised the US election campaign when determining their asset allocations.”
4. Euro IG bounce back
“Euro investment grade credit was the top category in (FI) for the first time this year. Flows into €IG have been mixed in 2017 with rumours of an ECB asset purchase taper and a 25 per cent allocation to French issuers in €IG indices seemingly concerning investors. The cumulative net flow figure YTD is just USD0.02 billion.”
5. Not everyone is going for gold
“There is a clear juxtaposition in views between US and European investors when it comes to gold, however. While European ETPs are enjoying some time in the sun, in three out of five months this year there have been net outflows from US domiciled ETPs.”
