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BlackRock reports strong demand for global fixed income ETFs


The BlackRock ETP Landscape report for September 2017 finds that strong demand for global fixed income ETPs has led to record flows into this category this year, at USD126.4 billion.

The USD12.7 billion of inflows recorded in September was led by an uptick in long-term US Treasury funds and high yield corporates.

BlackRock writes that broad EM equities accelerated to USD3.9 billion, marking a new annual record and the best monthly flows since May, despite modest US dollar strengthening.
Overall, flows in the third quarter reached USD126.0 billion, with year-to-date flows increasing to USD458.0 billion. This exceeds 2016’s recorded flows of USD378.4 billion.

Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, has listed five key stories behind the European ETP flows in September 2017:

1. Ich bin nicht ein Berliner
“September was another positive month for EMEA-listed European equity ETPs. They have now had 13 consecutive months of inflows, which is the longest run on record. However, US investor appetite for European equities appears to be cooling. With the European growth outlook strengthening, it seems that currency is playing an increasing role in flows. US dollar gains in September might have encouraged US investors to return to domestic, USD-earning equities.”

2. EM-pire building
“September was the eighth straight month of inflows into EMEA-listed emerging markets ETPs. The majority went into broad emerging markets exposures, as investors expanding the range of vehicles they use to access EM. EM futures contracts are running rich, so investors could be considering using ETFs, as a cost-effective equivalent.”

3. US financials fly
“September was the biggest-ever month of inflows (+USD0.5 billion) into EMEA-listed US financial sector ETPs, amid speculation that an imminent US rate hike will improve bank profitability. The financials inflows were so high, that even though all other sectors in aggregate had outflows, the net figure was still the second-largest ever month of inflows to EMEA-listed US sector ETPs.

 4. Gold in the red
 “September was the first month of outflows for gold ETPs since December 2016, breaking an eight-month inflow trend. We have previously highlighted the divergence between gold flows into EMEA- and US-listed ETPs –  it was more pronounced in September than at any point this year, as US-listed gold funds enjoyed their best inflow month since June 2016. It appears that US investors have focused on protecting portfolios over the last two months, whilst Europeans have increased allocations to risk assets and reduced exposure to gold.”

5. Ex machina 
“ETFs providing exposure to global companies that could benefit from the increasing use of robotics experienced their biggest month of inflows over September, adding USD780 million. At the start of 2017, the four global ETPs in existence had a total AUM of USD415 million. Today their combined AUM stands at USD3.6 billion. If we include mutual funds, the combined universe of 16 funds currently has an AUM of USD14.7 billion, up from less than USD300 million in 2015.”

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