EMEA-listed ETFs recorded net inflows of $7.8 billion in October, according to research from BlackRock. Equity ETFs dominated again with $6.3bn of the net new assets while fixed income ETFs gained $1.1bn. Net new assets for ETFs in the region in the year-to-date now stand at $81bn, already greater than the previous full calendar year record set in 2015.

US-listed ETFs offering exposure to developed market equities have gained more assets in 2017 than all EMEA-listed ETFs put together.

Breaking down the equity flows reveals that October was the biggest-ever month of inflows for EMEA-listed broad developed equity ETFs with $2.4bn, which marked only the second time ever that monthly flows in this category exceeded $2bn.

Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, commented: “Flows into broad developed markets equities have spiked in the fourth quarter in recent times – four of the last five years have had greater inflows in Q4 than any other quarter, evidence perhaps of investors returning to benchmark allocations as the year draws to a close.”

Investors in US-listed ETFs also preferred broad developed equities this year, albeit through developed ex-US exposure such as MSCI EAFE. In 2017 so far, these US-listed funds have added a staggering $84bn, more than the inflows to all EMEA-listed ETFs in total.

October was another positive month for EMEA-listed European equity ETFs. They have now had 14 consecutive months of inflows, extending their longest run on record. “While European investors continue to invest in European equities, US investor appetite seems to have cooled,” said Mattar. “$1.3bn has been withdrawn from US-listed European equity ETFs over the last three months. Recent US dollar gains might have encouraged US investors to return to domestic, USD earning equities.”

European business confidence, measured by manufacturing PMI, is at a seven-year high. “With a weakening euro likely to benefit export-heavy European companies, we may see US investors return, though they may choose to do so through currency-hedged vehicles,” added Mattar.

BlackRock reports that October proved a good month for investment grade fixed income ETFs, which added $1.3bn, the majority of which was in US dollar ETFs. This year has seen $6.2bn of inflows to EMEA-listed dollar credit ETFs compared to $2.9bn for euro credit ETFs. Mattar commented: “While equity ETF flows often show home country bias, this is less of a driver in fixed income. Though the political landscape has been volatile on both sides of the Atlantic, the higher yields on dollar-denominated investment grade relative to most developed market equivalents have attracted yield-hungry international investors.”

Emerging market debt ETFs lost assets in October for the first time this year. The outflows of $570 million ended nine straight months of inflows that had added $9bn to local and hard-currency exposures. Mattar said, “Despite improving economic conditions, earnings growth and investor sentiment, local currency weakness vs USD has dragged down and appears to have spooked some investors.”