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October BlackRock ETP report shows totals eclipse last year’s full year figures


The October BlackRock ETP report says that global ETPs gathered USD58.5 billion in October, propelling year-to-date industry flows to USD517.1 billion.

The figure eclipses last year’s record full-year total and was led this month by US, broad global and broad emerging markets (EM) equity exposures.

The firm writes that US equities drew in USD30.5 billion driven by a rebound in large caps and faster flows to small-caps amid strong earnings reports and renewed optimism for tax reform.
Broad global equity exposures brought in USD12.7 billion as global risk assets rallied on the Japanese election outcome and prospects for more central bank stimulus in Europe.

Broad EM equities maintained momentum, gathering USD4.6 billion this month, focused in the week leading up to China’s Communist Party Congress.

Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, lists the following comments on the five key stories behind the European ETP flows in October 2017.
1.     DM’s broad shoulders: October was the biggest-ever month of inflows (+USD2.4 billion) to EMEA-listed broad developed equity ETPs, only the second time ever that the monthly inflow has been over USD2 billion.
2.     European equity staycation: While European investors continue to invest in European equities, US investor appetite seems to have cooled. USD1.3 billion has been withdrawn from US-listed European equity ETPs over the last three months. Recent US dollar gains might have encouraged US investors to return to domestic, USD-earning equities.
3.     Making the grade: While equity ETP flows often show home country bias, this is less of a driver in fixed income. This year USD6.2 billion has been added to EMEA-listed USD credit ETPs vs. USD2.9 billion for euro credit ETPs.
4.     EMD of the road: October was the first negative month this year for EMD ETPs. The majority (-USD0.4 billion) of the outflows in October were from local-currency products, which had been ahead of their hard currency equivalents by USD0.5 billion this year, leaving them just USD0.2 billion ahead. 
5.     Sustainable breakthrough: It has been a record year already for sustainable ETPs. There appears to be a growing acceptance from investors that indexed products can provide exposure to sustainable investments without compromising returns. The MSCI Europe SRI index has outperformed MSCI Europe by 1.25 per cent YTD (source: Bloomberg at 31/10/2017).

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