After a record USD198.0 billion of inflows in July, levels moderated to USD129.7 billion in August, in line with the monthly average in 2024 (USD124.8 billion), BlackRock writes.
Flows across the board: Equity flows reached USD85.3 billion, while fixed income flows slowed to USD41.5 billion – still netting the third-highest inflow month of the year.
Breadth in sectors: In line with trends observed over the summer, tech continued to lead sector flows, with financials and utilities also popular.
Conviction in precision
BlackRock writes that Tech led sector flows in August, with USD10.6 billion added, taking YTD flows above USD40 billion. The next most popular sector YTD is financials, at just over USD9 billion. In line with the trend observed over the summer; financials (USD3.1 billion) and utilities (USD0.8 billion) also notched up positive inflow months. Financials have added USD7.4 billion over the past three months, largely into US financials, while eurozone financials flows netted out over the summer, after outflows in August offset the buying in June and July.
The USD4.4 billion added to utilities from May-August has turned YTD flows positive, and is indicative of the increasingly rate-cut-focused allocations we’ve seen coming through in sector flows. At the same time, the market volatility at the start of August led to the second-biggest inflow week of the year for the sector (USD0.8 billion). Flows have largely gone into US utilities, with some marginal global and European utilities allocations too.
Consistency in equity
While overall equity flows dropped from the elevated levels seen in July, trends remained consistent across the summer, BlackRock writes. US equity once again led with USD48.4 billion added in August, while emerging market (EM) flows also remained positive at USD22.0 billion, and investors continued to add to European equity ETPs, with a further USD1.5 billion of inflows.
Following the market volatility in Japan at the start of August, Japanese equity ETP flows picked up on the month to reach USD2.5 billion of inflows.
European equity flows have been driven by domestic buying – EMEA-listed flows hit USD2.4 billion in August but were offset by a second month of outflows from US-listed European equity ETPs (-USD1.0 billion in August), BlackRock writes. Versus July, mid cap and financials flows dropped off within European equity, while health care and large cap flows picked up.
Rates and investment grade persist
Rates flows in August stayed in line with July levels, with USD18.6 billion added, while multi-sector flows picked up to USD11.5 billion and investment grade (IG) exposures gathered USD7.9 billion. EM debt and high yield (HY) credit dropped off versus July – consistent with the broader unwillingness we’ve seen among investors to take persistent risk in fixed income this year.
Within the USD0.6 billion of European rates flows, short duration exposures were by far the most popular (USD0.7 billion), building on the USD0.5 billion added in July, while intermediate and long-end outflows offset the buying on the month. BlackRock writes that this stands in contrast to the trends in US rates flows, where buying has been consistent across maturities: intermediate-term flows picked up MoM to USD3.1 billion, while short-term flows slightly dropped to USD5.3 billion.
Karim Chedid, head of investment strategy for iShares EMEA at BlackRock, says, “August saw USD129.4 billion added to Global ETPs, aligning with the monthly average for 2024. So far, 2024 has seen ETF inflows achieve record levels. Equity flows reached USD85.0 billion, while fixed income flows slowed to USD41.6 billion, still marking the third-highest inflow month of the year reflecting rising expectations of central bank easing. Tech continued to lead sector flows with USD10.6 billion added, followed by financials and utilities, which also saw positive inflows.”
