BlackRock’s figures for ETF flows in Novembers sees flows into global ETPs drop month-on-month to USD74.8 billion in November, from USD121.0 billion in October.
The firm writes that while fixed income flows remained relatively steady at USD33.7 billion for the month, equity flows almost halved from USD84.9 billion in October to USD43.2 billion in November.
In November fixed income flows, credit (USD17.1 billion) outpaced rates ETPs (USD11.9 billion) for the first time this year.
BlackRock writes that after a lacklustre year for conviction in asset allocation, the resurgence in credit flows has been remarkable. High yield (HY) –which was on track for a record outflow year with a cumulative outflow of -USD21 billion as recently as 21 September –is now only -USD5 billion out for the year. Meanwhile, investment grade (IG) flows have risen to USD36 billion for the year, from USD23 billion as of 21 September.
In November, HY inflows continued with USD7.0 billion added –slightly down from the USD7.8 billion added in October –while IG flows rose from USD3.4 billion in October to USD10.1 billion in November.
When focusing on geographic exposure, the firm writes that in European credit the conviction continues to lie with IG over HY, with USD3.0 billion into EUR IG in November (up from USD2.5 billion in October) and USD0.3 billion into European HY. For US credit, HY accounted for a larger slice of the pie, with USD6.7 billion of inflows in November vs. USD7.2 billion into IG.
The drop off in headline equity flows was once again due to US equity allocations falling month-on-month, with inflows dropping to USD21.4 billion from USD57.5 billion in October. Emerging market equity allocations increased to USD11.7 billion –the highest monthly inflow since April –while European equity outflows of -USD1.7 billion were the largest since August.
European equity net flows are now at -USD16.5 billion YTD, including a cumulative -USD27 billion out since March, vs. net selling of -USD27.2 billion over 2021. Investors have been turning away from broad European equities –November’s outflows were primarily out of large caps –but pockets of selectivity persist. Midcaps gathered USD0.3 billion in November.
Sector flows tilted slightly more defensive in November, BlackRock writes, with outflows from financials, energy and industrials in the last week of the month skewing the headline monthly figures. Healthcare once again led inflows, with USD3.1billion added in November, followed by tech, with USD2.2 billion. Financials flows turned negative due to selling late in the month (-USD0.4 billion), while energy notched up a second consecutive month of inflows with USD1.0 billion added.
In factors, value notched up a second consecutive month of inflows in November (USD1.5 billion), following on from the USD0.6 billion added in October. While absolute inflow levels remain low, value’s reversal comes after four consecutive months of outflows from June to September. Quality remains the most popular factor YTD, with a further USD1.7 billion added in November, while min vol flows slowed to USD0.5 billion.
Sustainable inflows picked up in November, BlackRock writes, with USD7.3 billion added across US-and European-listed ETPs. Europe increased its flows from USD4.2 billion in October to USD6.5 billion in November, while the US reversed the previous month’s net outflows to post USD739 million of inflows in November.
Within Europe, fixed income accounted for the majority of sustainable flows: the USD3.7 billion added in November marked the highest monthly inflows for the asset class this year, outpacing July’s USD3.6 billion. Fixed income flows were mainly driven by ESG best-in-class strategies (USD3.4 billion), split across eurozone, US and global exposures. Equity flows in Europe matched 2022’s monthly average, at USD2.8 billion, and were also largely driven by best-in-class strategies (USD1.5 billion), led by US and global exposures.
In the US, sustainable inflows were dominated by equities (USD663 million), led by ESG optimised (USD219 million) and climate-exclusive strategies (USD206 million). Fixed income saw USD76 million of net inflows – reversing October’s outflows (-USD16 million), but still down vs. 2022’s monthly average of USD145 million.