EMEA-listed exchange-traded products providing exposure to European equities have recorded their largest monthly inflow so far in 2019 with $4.4 billion added in October, according to BlackRock’s latest ETP Landscape report.
October marked the second consecutive month of strong net inflows into European equity ETPs listed in EMEA.
This marked the first time European equity ETPs have received positive inflows in consecutive months since October 2018 following net buying of $3.5bn in September.
Despite the improvement in sentiment towards European equities, net flows for the year remain negative at minus $4.0bn.
Investors tempered their buying of US equity ETPs to only $0.2bn in October after September’s record 2019 inflows of $5.3bn. Despite lagging European equity inflows in October, net flows into US equity ETPs year-to-date are $10bn.
Investors continued to sell emerging market equity ETPs for a third consecutive month with $0.3bn in net outflows recorded in October. These outflows came despite an apparent de-escalation in global trade tensions, although the figure does mark an improvement from September’s net withdrawals of $1.0bn.
ETPs providing exposure to the value factor gained $0.4bn in October – the biggest monthly inflow into the exposure so far this year. Investors sold minimum volatility ETPs for a second consecutive month (-$0.2bn), although the exposure remains the most popular factor this year with cumulative net inflows of $3.3bn.
Net inflows across all EMEA-listed equity ETPs amounted to $8.3bn in October which accounts for approximately 55% of the $15bn net inflows recorded across all asset classes during the month; however, inflows into equity ETPs have moderated compared to September’s gathering of $13.8bn.
Fixed income
EMEA-listed fixed income ETPs gained $4.9bn net inflows in October. Demand for fixed income exposures has been strong throughout 2019 with year-to-date net flows standing at $55bn. (By comparison, inflows into equity ETPs are $30bn.)
Within fixed income, investors continued to favour quality in October with investment-grade ETPs and rates ETPs gaining the lion’s share of flows at $1.2bn and $1.8bn respectively. Investment-grade and rates ETPs have not had a negative flow month so far this year, with this ten-month winning streak being their longest on record.
ETPs providing exposure to high-yield securities were sold off modestly in October (-$0.1bn), while ETPs providing exposure to emerging market debt gained $0.9bn. Within EMD, investors favoured local currency ETPs (+$0.8bn) while selling hard currency ETPs (-$0.1bn).
Commodities
Inflows into EMEA-listed commodity ETPs picked up to $1.6bn in October after dipping to $0.7bn in September. The majority of inflows were allocated to gold ETPs ($1.2bn) amid market volatility.
Silver ETP flows were essentially flat in October following outflows of $0.1bn in September.