BlackRock Global ETP Flows : Flows tick up: $98.3B was added to global ETPs in June – the highest inflow month in 2023, up from $78.0B in May. This takes H1 ETP flows to $375.9B, versus $301.4B over the same period last year.
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BlackRock Global ETP Flows June 2023
Laura Cooper, Senior Investment Strategist of iShares EMEA at BlackRock
Commenting on the report, Laura Cooper, senior macro investment strategist for iShares EMEA at BlackRock said, “June capped off a record H1 for flows into fixed income ETFs in Europe, as yield-seeking investors continued to turn to bonds. The record-setting period included the highest inflow month year-to-date in June, with USD98.3 billion added to global ETPs. The month also saw a rotation out of European equities, as investors allocated back to the US after a period of holding European exposures – a trend that played out for far longer than usual throughout 2023.”
Global ETP Flows June 2023
- A strong H1: over H1, equity flows ($209.5B) outpaced fixed income (FI, $165.4B), but notably, it was a record half for flows into EMEA-listed FI ETPs.
- Mixed picture: in June, equity flows hit $75.8B, while FI buying moderated slightly to $26.5B, and commodity flows flipped into negative territory (-$5.1B).
Diverging paths
June ETP flows pointed to a rotation out of European equities and increasing conviction in US equities – an acceleration of the trend we’ve seen emerge over the past six weeks. US equity flows totalled $45.2B in the largest inflow month for the exposure since October 2022. Meanwhile, European equity outflows hit -$4.6B – the highest monthly net sell since August 2022.
For the first time this year, international investors meaningfully sold Europe: outflows from US-listed European equity ETPs accounted for 48% of total European equity outflows in June. So far this year, international investor flows into European equities have been stickier versus history.
As is usually the case with US equity ETP flows, the vast majority went into US-listed exposures ($42.4B), but EMEA-listed US equity flows also picked up to $2.3B – the largest inflow month since March.
Losing its shine?
Headline commodity outflows of -$5.1B in June were led by gold (-$3.8B), marking the largest month of selling for the precious metal since September 2022. This has unwound much of the $4.2B that was added between March and April, with outflows fairly evenly split between US- and EMEA-listed ETPs.
Broad market commodity exposures also registered a net sell (-$0.8B), marking a fourth consecutive outflow month and the 13th of the past 14 (a streak interrupted only by February 2023, which saw $0.1B of inflows).
Broad buying of EMD
June marked the first time this year that emerging market debt (EMD) flows have been positive across all three major listing regions (EMEA, APAC and the US). EMD ETPs recorded global net inflows of $2.6B in June – the second-highest inflow month this year.
APAC-listed flows into EMD have been relatively consistent across 2023 so far, while EMEA-listed flows have seen two consecutive months of inflows, and USlisted flows turned positive in June for only the third time this year.
Within EMEA-listed EMD ETPs, a clear preference for local currency exposures has come through over H1 2023: we’ve seen $1.6B added to local currency products, versus outflows of -$0.7B from their hard currency counterparts. EMEA-listed local currency EMD has seen inflows for seven out of the past eight months, following a broad lack of allocation in 2020 and 2021, and flat flows in 2022.
Is tech stretched?
Taking stock of sector flows over Q2, tech saw its strongest quarter since Q1 2022, with $11.3B added, while healthcare flows rebounded to $5.0B in Q2. This contrasts with Q1, when flows went into tech at the expense of healthcare. The defensive shift in Q2 was clear and came alongside reduced flows into financials ($0.6B) and industrials ($0.7B), as well as outflows from materials (-$1.6B).
Given market leadership so far this year, much focus has been on whether US tech has been stretched. Looking at global ETP flow data, US tech sector flows have accounted for 33% of total tech flows YTD, and 7% of overall US equity flows YTD. By these metrics – acknowledging that positioning goes beyond ETP flows – US tech looks far from stretched, in our view.
Source: ETFWorld.co.uk
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