ETFs face up to market volatility

Our feature this week sees Gill Wadsworth investigating how the UK gilts (UK government bonds) market, and its associated ETFs, have withstood recent market volatility. Investors in the UK facing political shenanigans, rising interest rates and increasing inflation have traditionally seen gilts as a safe haven investment, but Refinitiv data revealed that big name ETFs have seen years of gains disappear during October with iShares’ GBP1.1 billion Core UK Gilts UCITS ETF returning -25.12 per cent in the year to 19 October while the SPDR Bloomberg UK Gilt UCITS ETF is down -26.18 per cent.

As is increasingly the case, ETFs with gilt exposure have been working efficiently during the recent volatility, with Gina Miller of SCM Direct saying: “Once again ETFs have shown their resilience and pricing transparency in volatile markets”.

Steve Dunn, head of ETFs at abrdn, says that this is the time to look at commodities. “Despite the volatile market environment, palladium has outperformed the other precious metals by a healthy margin in 2022,” he says.

Having spent last week in New York talking with the industry there, the outstanding observation was that despite falling and volatile markets in both equities and fixed income, ETFs in the US stand to have their second largest year of inflows on record. The ETF industry is proving, again, its ability to stand up to market volatility, and to rapidly adapt to market conditions. The rise of active ETFs was another key theme in conversations with practitioners in the US.

Next week will see publication of our ETF Express US Awards Special report which will bring you the views of our winners in the awards, both from the issuer and service provider perspectives.

Beverly Chandler, Managing Editor

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Companies in this issue

Aptus Capital Advisors
Bloomberg LP
SCM Direct
Tabula Investment Management


ETFGI reports that the ETFs industry in Europe suffered net outflows of USD5.06 billion in September, bringing year-to-date net inflows to USD61.52 billion.
Gill Wadsworth writes that the once reliable gilt – largely seen as almost ‘risk free’ and a portfolio mainstay for cautious investors – has fallen victim to extreme market volatility wiping billions of pounds from investor portfolios.
In a year which has thrown unprecedented challenges at asset managers, with both fixed income and equities experiencing drawdowns and volatility, ETFs in the US are on course to have their second highest inflows.


Global ETF Launches
The financial climate has dominated ETF launches this week with launches from AllianzIM and Aptus Capital Advisors designed to help investors facing increasing interest rates and higher inflation. 
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