Global ETPs raked in $100.6 billion in net inflows during January, eclipsing the previous monthly inflow record of $68.7bn set in September 2008, according to BlackRock‘s latest ETP Landscape report. EMEA-listed ETPs gathered $14.1bn in January, equalling the largest monthly inflow of all time in January 2015.
Patrick Mattar, iShares EMEA capital markets team at BlackRock
Equity ETPs were most in demand during the month with $83.2bn of net inflows, showing a heightened global appetite for risk assets.
More than half of these net inflows went to ETPs tracking US and Japanese equities, gathering $35.8bn and $12.1bn respectively.
Large-caps and cyclical sector funds accounted for the majority of US inflows. The report suggests this was prompted by the US tax overhaul and higher-than-anticipated federal spending.
Japanese equity ETPs took in just under a third of inflows compared to the US. However, given the comparatively smaller size of the market for Japanese-focused ETPs, investor appetite for exposure to the region is trending up strongly.
Patrick Mattar, from the iShares EMEA capital markets team at BlackRock, commented, “European-listed Japan exposures have been on a seemingly unstoppable upwards trajectory since September, with a cumulative flow of over $4bn. Flows into Japanese equities totalled $1.4bn in January 2018, the second largest monthly flow ever into EMEA-listed ETPs, and the highest rate of purchases since August 2014.”
Mattar also stated that “Europe is back” as EMEA-listed European equity ETPs added $3.8bn in January – the largest inflow since July 2017. Prior to the outflow of December 2017, these ETPs had clocked up 15 consecutive months of inflows.
Not to be outdone by developed markets, EMEA-listed emerging market ETPs collected over $2bn making it the segment’s largest ever monthly inflow. This is the twelfth consecutive month of inflows, another record for the region. Mattar noted that “domestic fundamentals remain strong and long-term relative valuations remain attractive. It appears that emerging market equities are in a sweet spot for investors.”
A weaker US dollar and stronger commodity prices have also played a part in strengthening the emerging market proposition for investors, both in equity and debt markets. Globally, broad emerging market equity and debt ETPs both saw record monthly inflows in January of $10.6bn and $4.0bn respectively.
With respect to emerging market debt inflows, Mattar said, “January inflow is already greater than any other first quarter on record. It appears that the continuing existence of near-record low yields on developed market sovereign debt and investment grade credit, along with the weakening USD is continuing to drive flows into emerging market debt ETPs.”
Elsewhere in fixed income ETPs, high yield corporates saw outflows of $2.9bn globally, while US Treasuries took inflows of $1.5bn. Investment grade corporates saw a small outflow of $300 million.
Commodity ETPs took in $6bn overall for the month, with $1bn flowing into gold and $1.5bn flowing out of oil.