BlackRock Global ETP Flows : global ETP flows inched higher in August, with $49.4B added, up from $46.9B in July.
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Global ETP Flows August 2022
Equities in demand: equities commanded a bigger slice of the inflows, with $29.7B added – accounting for 60% of net buying in August vs. 42% in July. Meanwhile, fixed income inflows moderated to $23.2B.
Commodity selloff slows: commodity outflows tempered from July’s record levels, with $4.5B of selling in August.
Renewed selling in Europe
The pickup in equity buying was driven by US equity inflows more than doubling month-on-month, from $12.6B in July to $30.2B, which more than offset increased outflows from European equity.
EM flows remained relatively consistent at $1.8B in August, and were split quite evenly between broad market exposures and single country exposures (dominated by China and Brazil).
European equity ETPs continued to be sold in August, for the sixth consecutive month. The region saw $7.7B of outflows – the second-highest on record, behind the $8.9B of outflows post-Brexit vote in July 2016. Amid an uncertain central bank policy outlook, slowing activity and falling consumer confidence, outflows predominantly came from broad European large cap exposures. Both US and EMEA-listed ETPs registered outflows (EMEA-listed outflows accounted for $4.2B).
Back in dEMand?
As has been the case across the year, credit ETPs were unable to record a second consecutive strong inflow month. High yield (HY) outflows totalling $3.5B in August – almost entirely out of US HY – took the shine off the $5.2B added globally to investment grade (IG) ETPs. This left August credit flows at $1.7B, significantly lower than the $14.0B added in July.
Investors have still been allocating to risk in fixed income. August marked the first inflow month for emerging market debt (EMD) since January, with $1.4B added, almost entirely into hard currency exposures. YTD flows remain negative, however, given the $11.7B lost between February and July.
Elsewhere in fixed income, rates flows fell to $10.0B in August, down from $17.3B in July. Short-duration exposures returned to positive territory after July’s outflows, with $1.5B added, while intermediate term ETPs accounted for the biggest proportion of rates flows ($5.3B). Long-duration exposures accounted for 32% of rates flows, down from 47% in July.
T-earning point?
With Q2 earnings season all but over, August marked a shift in sector flow trends, with overall allocations down month-on-month. Sectors that have consistently recorded outflows over the past few months saw selling moderate in August. Meanwhile, overall buying of sectors such as healthcare and tech – which have gathered inflows in recent months – fell from July levels.
Financials notched up a first inflow month since January, with $2.4B added, all towards the end of the month. As highlighted above, this came amid a broad reduction in sector ETP flows in August, meaning that financials constituted the largest sector allocation over the course of the month. US-listed US financials ETPs drove inflows into the sector, while European exposures continued to be sold, and EMEA-listed US financials exposures continued their outflow trend.
Defensive sector flows persisted over August, albeit at lower levels, with $0.7B into healthcare and $0.7B into tech, while utilities flows picked up for a fourth consecutive month ($0.8B).
EMEA buying leads sustainable inflows
Sustainable ETPs recorded a total of $4.1B of inflows in August, across EMEA- and US-listed products. This was less than half the $9.0B added in July – the strongest inflow month so far this year – but significantly higher than the buying seen in May and June ($876m and $2.8B, respectively). EMEA-listed products once again led the inflows, with $3.2B of buying vs. $948m for US-listed ETPs.
In EMEA, flows into ESG best-in-class fixed income ETPs dominated sustainable buying, taking $1.6B for the month – the second-highest monthly inflows this year – driven by euro corporate, euro aggregate, and emerging marker (EM) exposures. ESG optimised strategies were the next most popular, with $762m of inflows, dominated by US ($414m) and world ($199m) exposures. ESG best-in-class equity strategies – which recorded strong inflows in 2021 but have seen weaker sentiment this year – recorded $570m of inflows. This was just below the YTD monthly average of $621m and was a result of muted demand across the strategy, rather than being driven by significant outflows from a particular exposure.
US-listed sustainable ETPs recorded $948m of inflows – their fourth-highest total for 2022 and above their YTD monthly average of $827m. Equity flows accounted for the vast majority, with $824m of buying. Within equities, flows were equally divided across ESG optimised ($283m), environmental strategies ($260m) and ESG best-in-class ($158m) exposures.
Source: ETFWorld.co.uk
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