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BlackRock reports new record for monthly ETP flows


Highlights from the BlackRock ETP Landscape report: January 2018 reveal that Global ETPs gathered USD100.6 billion in January, making a new record for monthly flows, propelled by US and Japanese equities and bolstered by broad emerging (EM) equities and EM debt.

US equities drew in USD35.8 billion focused in large-caps and cyclical sector funds spurred by the US tax overhaul and higher than expected federal spending, the firm says.

Japanese equities collected USD12.1 billion, a new monthly best, amid improving global growth, solid earnings and support from Bank of Japan purchases. Broad EM equities and EM debt each set new monthly flow records in January with USD10.6 billion and USD4.0 billion, respectively, amid a weaker US dollar and stronger commodity prices.
Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, comments on the five key stories behind the European ETP flows in January 2018:

1.     EM flow: January was the largest ever inflow month for EMEA-listed emerging market equity ETPs, as investors allocated over USD2 billion to these funds for the first time in a calendar month. There have now been 12 straight months of inflows, the longest inflow run on record. EM domestic fundamentals remain strong and long term relative valuations remain attractive. It appears that EM equities are in a sweet spot for investors.

2.     Europe is back: The USD3.8 billion added to EMEA-listed European equity ETPs made January the largest inflow month since July 2017. This inflow follows an outflow month in December, which ended a 15-month run of inflows, dating back to August 2016.

3.     EMD OMG: EMEA-listed EMD exposures had a strong start to the year, with USD1.1 billion of purchases in January, the largest monthly inflow since July 2016. The current run rate is marginally short of the record first quarter, recorded last year (+USD3.8 billion) but the January inflow is already greater than any other first quarter on record. It appears that the continuing existence of near-record low yields on development market sovereign debt and investment grade credit, along with the weakening USD is continuing to drive flows into EMD ETPs. 
4. Flowkyo drift: European-listed Japan equity exposures have been a seemingly unstoppable upwards trajectory since September, with a cumulative flow of over USD4bn. Flows into Japanese equities totalled USD1.4 billion in January 2018, the second largest monthly flow ever into EMEA-listed ETPs, and the highest rate of purchases since August 2014. January’s total inflow for EMEA-listed products has already reached 40 per cent of 2017’s total inflow of USD3.5 billion. Investors seem to be focusing on accommodative monetary policy alongside the sizeable valuation discount to developed market peers given the strong earnings growth in 2017.
5.     Transformers: robots reach new highs: January was the largest ever month for inflows to EMEA-listed ETFs that track robotics-related indices, as investors added USD585 million to the three UCITS funds available. It appears that investors are becoming increasingly comfortable using indexed vehicles to access long term thematic exposures, which have historically been dominated by active managers. If we broaden the robotics fund universe to include US-listed ETFs and all active mutual funds globally that invest in the theme, assets have grown to USD24.4 billion from USD206 million over the last three years across 16 funds.

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