Trading activity on the Tradeweb European-listed ETF marketplace came in at just under €20 billion during January 2018, setting a new monthly record by smashing the platform’s previous strongest performance of €17.74bn set in May 2017.
Adriano Pace, managing director for equity derivatives at Tradeweb.
Equity ETFs accounted for 63% of total platform flow, while fixed income ETFs and commodity ETFs made up 31% and 6% respectively. Both equity and fixed income ETFs saw net buying in January with ‘buys’ outpacing ‘sells’ by 7% and 3% respectively (in regards to total platform flow).
European equities was the most heavily-traded ETF category with notional volume surpassing €4bn. It was however also the only stocks-based sector to see net selling during the month with 55% of trade volume within the category designated as ‘sell’ orders vs 45% for ‘buy’ orders.
Investors continued to be bullish on US equities during the month with over €3.4bn notional volume traded in North American equity ETFs, 61% of which was classified as ‘buy’ orders vs 39% as ‘sell’ orders.
‘Buys’ in commodity ETFs matched ‘sells’ at 3% each, as a proportion of the overall platform flow.
Source: Tradeweb.
While equity ETFs were by far the most heavily traded asset class in January, a fixed income instrument topped the list of most actively-traded ETFs for the third consecutive month. January’s top security was the iShares $ TIPS UCITS ETF, which tracks the performance of the Barclays US Government Inflation-Linked Bond Index. The fund provides exposure to US Treasury Inflation Protected Securities, which offer a degree of protection from unexpected increases in inflation in that the principal amount of the issue is adjusted over time to reflect changes in an underlying price index. The ETF has an expense ratio of 0.25%.
Top ten ETFs by traded volume
Source: Tradeweb.
According to Tradeweb, the share of European ETF transactions processed via Tradeweb’s Automated Intelligent Execution tool (AiEX) remained high at 29%.
Adriano Pace, managing director for equity derivatives at Tradeweb, said, “Against a backdrop of sweeping regulatory reform and heightened market volatility, more than 93% of trade enquiries resulted in completed transactions, which attests to the strong pricing our clients receive on the platform.
“This year promises to be very exciting for European ETFs. The new reporting requirements under MiFID II will provide investors with much-needed visibility into ETF trading activity, enabling them to better gauge the full depth of the market.”