BlackRock writes that monthly allocations to global ETPs fell to their lowest level since March 2020 in April, with just USD27.4 billion of inflows, down from USD117.4B in March.
The firm says that while inflows dropped across asset classes, they fell most acutely in equities, where just USD2.8 billion was added (down from USD76.2 billion in March).
Fixed income flows fell slightly from USD25.5 billion to USD18.8 billion, while commodity flows tempered to USD3.6 billion.
Outflows of -USD25.6 billion from US equity ETPs – the largest monthly net sell on record for the exposure – dragged overall flows down in April and came entirely out of US-listed ETPs (EMEA-listed peers saw USD0.6 billion added), BlackRock writes.
The US-listed outflows look to have been largely driven by a change in investment vehicle, with futures appearing cheaper to hold than the relevant ETP.
Investors also continued to sell European equity ETPs (-USD2.5 billion), albeit at lower levels vs. March, with April outflows almost entirely from US-listed ETPs, with international investors starting to unwind. YTD flows into US-listed European equity ETPs have turned negative, following net outflows of -USD3.5 billion over March and April.
While developed market (DM) regional flows struggled to gain momentum, emerging market (EM) flows were more consistent, with USD11.7 billion added, up from USD6.6 billion in March, BlackRock says. Increased flows into single country exposures largely APAC-listed China ETPs – accounted for 57 per cent of April’s EM flows, up from negative flows in March, driving the MoM figure higher.
In fixed income, rates flows (USD15.9 billion) rose to the highest level since November 2018 and the second-highest on record, focused in US Treasuries. Short-term maturity flows (USD7.5billion) led in April, while long-term flows fell to USD1.8 billion – in contrast to March, when the majority of flows went into longer-term maturities, BlackRock says.
Flows into inflation linkers turned negative (-USD0.3 billion), off the back of USD1.9 billion of outflows in the last week of the month, unwinding some of the USD4.0 billion added in March and marking a third outflow month in four for linkers.
Investors remain split on credit: HY outflows have persisted for four consecutive months, with -USD3.5 billion out in April, again dominated by US HY – although EUR HY also sold off. In contrast, IG flows remained positive but fell to USD1.2 billion, vs. USD3.3 billion in March, due to reduced buying and -USD0.7 billion of outflows from eurozone IG.
Sector flows pointed to a more defensive tilt across equity allocations in April, with healthcare (USD3.6 billion) leading the way, followed by utilities (USD2.0 billion) in its third-highest monthly inflows on record. The sector has gathered USD4.0 billion YTD, approaching its annual flow record of USD4.4 billion set in 2014.
These trends were also reflected in factor flows: quality (USD1.9 billion) remained most popular, while value (-USD0.1 billion) turned negative for the first time since December 2021, and minimum volatility (USD0.8 billion) saw its first inflow month in three.
Elsewhere, inflows into tech (USD1.3B) continued at a slower pace vs. March, and materials flows (USD1.6 billion) also persisted. April outflows of -USD0.9 billion from industrials fully reversed the USD0.5 billion added in March, while financials remained unloved (-USD6.3 billion). YTD flows into financials stand at -USD3.5 billion, completely unwinding the record allocations seen in February, BlackRock writes. However, investors have not fully sold out of the sector – 2021 net inflows of USD46.2 billion have a long way yet to unwind, the firm says.
Sentiment towards sustainable ETPs remained under pressure in April, with inflows into EMEA- and US-listed exposures dropping to USD4.41 billion. Europe gathered the lion’s share of inflows (USD3.4 billion), while the US dropped to USD1.1 billion – half the level seen in March.
Within European flows, global clean energy strategies (USD260 million) continued to dominate, followed closely by US exposures, including S&P Screened (USD250 million) and USA Optimised (USD226 million). Across sustainable strategies more generally, equity ESG Screened recorded the highest inflows for the month with USD774 million add, while equity best-in-class saw net outflows of -USD404 million. On the fixed income side, in contrast, inflows into best-in-class strategies (USD6 million) rose significantly on the month.
Delving deeper into US flows, on the equity side, the vast majority came from a single optimised strategy, with USD765 million added. As in Europe, US equity best-in-class strategies saw outflows (-USD312 million), while ESG screened equity exposures (USD140 million) registered inflows. In US fixed income ETPs, monthly flows also reflected European trends, with best-in-class strategies (USD500 million) leading the way. This was closely followed by ESG optimised fixed income, with inflows of USD418 million.