BlackRock’s Global ETP Flows for January 2021 show that assets inflows recovered in January, with USD85.5 billion of inflows, against USD84.0 billion in December 2020.
Flows into equity ETPs accounted for the majority of the inflows, as was the case in the previous two months. Fixed income flows rose slightly to USD21.2 billion, and commodity flows returned to positive territory for the first time since October, at USD3.1 billion.
BlackRock reports that the key themes in January opened with a focus on sectors.
Buying across sector ETPs remained strong in January, in a continuation of the trends seen towards the end of 2020, BlackRock writes.
Flows into financials totalled USD6.8 billion, boosted by the broad uptick in sentiment towards cyclicals in the days following the Georgia vote. This was the second-highest inflow month on record for financials ETPs, falling short of the USD7.6 billion added in November 2016.
Cyclical sectors continued to be popular, says BlackRock. Energy gained a record USD4.9 billion of inflows, industrials ETPs added USD3 billion (the second-highest inflow month on record), and materials gathered USD1.9 billion, including a record USD0.6 billion into EMEA-listed products.
Meanwhile, flows into tech ETPs also rose, hitting a record USD8.5 billion in January, BlackRock writes.
“Tech was the most popular sector in 2020 and has started 2021 on a similar footing. Differences below the surface show an increase in selectivity: flows into EMEA-listed subsector and thematic funds have increased, whereas in 2020, buying of broad tech exposures led the inflows. Flows into healthcare –which had also been popular in 2020 –dropped to almost flat in January, with US investors in particular turning cool on the sector; EMEA-listed buying has persisted, albeit at lower levels.”
Diversifying equity exposure was the second theme noted by BlackRock. “Buying in broad DM equity ETPs and EM equity ETPs drove the inflows in January (USD36.3 billion), with regional exposures falling out of favour. Global flows into US equities dropped to the lowest level since July 2020 (USD3.3 billion), and flows into European equities fell to USD0.8 billion, from USD2.6 billion in December.
“Under the surface, there was divergence across listing regions, with US equity ETP flows driven exclusively by EMEA buying: investors added USD3.1 billion to EMEA-listed US equity ETPs –predominantly into sustainable products –while net flows into US-listed US equity ETPs were flat, leading to the overall drop in US equity buying.”
Flows into European equities were more broad-based, with US-listed flows accounting for approximately half of the USD0.8 billion of European equity buying, and representing a pickup in sentiment in US-listed European equity ETPs, which had registered outflows in December, BlackRock writes.
“EM equity flows have stayed reasonably consistent over the past three months, and recorded USD10.4B of net inflows in January. US-listed flows made up the bulk of the inflows, with EMEA-listed inflows accounting for USD3.7 billion in January and APAC-listed flows ending the month flat.”
Inflows into inflation-linked bond ETPs hit USD4.2 billion in January, just shy of the record inflow month of USD4.3 billion in June 2020, helped by a pickup in US-listed flows.