Fixed income exchange-traded products drew in $17.6 billion in net inflows during June, marking the best month of flows for the asset class this year, according to the most recent BlackRock ETP Landscape Report.
The global ETP industry added $59bn in net new assets during June 2017 with fixed income ETPs leading the pack with net inflows of $17.6bn.
The strong flows were led by demand for investment grade corporate bond ETPs which gathered $6.6bn including $1.2bn for European-domiciled euro-denominated investment grade ETPs. These flows in June marked the largest month for the segment since May 2016.
Patrick Mattar, iShares EMEA capital markets team at BlackRock, commented: “This is the second net inflow month in a row for euro denominated investment grade ETFs and comes after a long period of instability in the flow patterns. The French election result appears to have reduced concerns around European political risks. Even hawkish rhetoric from Mr. Draghi at the end of the month could not shake the positive picture for euro denominated investment grade.”
The global ETP industry gathered $59bn in June according to BlackRock with US equities and emerging markets exposure also seeing significant net inflows.
US equities brought in $13.9bn including $5.2bn to large caps. Broad emerging markets equities drew in $3.8bn.
“2017 has been a very strong period for emerging market ETFs globally,” said Mattar. “The current six straight months of inflows has been the best monthly run since January 2013 when a run of seven straight months came to an end. Investors have seemingly focused on improving fundamentals rather than the protectionist rhetoric that characterised the US election campaign when making asset allocation decisions.”
In addition, emerging markets debt flows added $3.2bn as the sector remained resilient despite steep declines in oil prices.
Mattar notes: “The 100 metre emerging markets debt dash is turning into a marathon. The June inflow means that there have now been positive inflows every month this year, and every month inflows have been $1bn or greater.
“The cumulative $7.5bn inflow in since the start of the year makes this the standout area in fixed income ETPs. Emerging markets debt ETPs are likely to be benefiting as investors seek to diversify their yield exposure as traditional yield sources remain relatively depressed.”
ETPs tracking European equities also attracted $5.1bn in net new assets across all domiciles bringing the total amount flowing into this market segment year-to-date to an impressive $28.8bn and nine consecutive months of inflows. According to BlackRock, this makes it the longest inflow run for European equity ETPs since 2010.
Mattar said: “With similar drivers to euro denominated investment grade ETPs, and US investors continuing to search for equity risk offshore, there appear to be significant tailwinds behind European equity ETPs at the moment that show no sign of abating.”