The BlackRock ETP Landscape report for June 2017 finds that the global ETP industry gathered USD59 billion in June.
BlackRock writes that US equities brought in USD13.9 billion including USD5.2 billion in large caps and inflows to health care and financials against a backdrop of health care and Fed policy prospects.
Broad emerging markets (EM) equities drew in USD3.8 billion and EM debt flows added USD3.2 billion as emerging markets remained resilient despite steep declines in oil prices.
Fixed income drew in USD17.6 billion, marking the best month this year, led by investment grade corporate bonds with USD6.6 billion. Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, comments on the five key stories behind the European ETP flows in June 2017.
1. Euro denominated investment grade ETPs (Macr)on the up
“June was the largest month since May 2016 for European-domiciled euro denominated investment grade ETPs, which gathered USD1.2 billion. This is the second net inflow month in a row for euro denominated investment grade ETFs and comes after a long period of instability in the flow patterns. The French election result appears to have reduced concerns around European political risks. Even hawkish rhetoric from Mr. Draghi at the end of the month could not shake the positive picture for euro denominated investment grade.”
2. EMD sprint now a marathon
“The 100 metre EMD dash is turning into a marathon. The June inflow means that there have now been positive inflows every month this year, and every month inflows have been USD1 billion or greater.
“The cumulative USD7.5 billion inflow in since the start of the year makes EMD the standout area in fixed income ETPs. EMD ETPs are likely to be benefiting as investors seek to diversify their yield exposure. As traditional yield sources remain relatively depressed.”
3. EM-phasis on equity
“2017 has been a very strong period for EM ETFs globally. The current six 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 making asset allocation decisions.”
4. Sacré bleu
“Across all domiciles this year an impressive USD28.8 billion has now flowed into European equity ETPs, with nine consecutive months of inflows, making it the longest inflow run since 2010. With similar drivers to euro denominated investment grade ETPs, and US investors continuing to search for equity risk offshore, there appear to be significant tailwinds behind European equity ETPs at the moment that show no sign of abating.”
5. Rise of the machines
“ETFs providing exposure to companies that can potentially benefit from the robotics theme have grown impressively this year, attracting USD1.7 billion globally. Including active mutual funds investing in the same space, the growth has been even more significant. The cumulative total asset growth across ETFs and mutual funds this year is USD5.5 billion. What is even more impressive is that two years ago assets was USD271 million. It appears that investors are increasingly looking to gain exposure to long term secular growth trends as well as shorter term allocations between traditionally-weighted investment products.”