BlackRock Global ETP Flows : High tide: over 2023, $965.4B was added to global ETPs – making it the second-highest inflow year on record, behind 2021’s record $1.3T.
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BlackRock Global ETP Flows December 2023
Laura Cooper, senior macro investment strategist for iShares EMEA at BlackRock
Commenting on the report, Laura Cooper, senior macro investment strategist for iShares EMEA at BlackRock, said, “Investor risk appetite was strong in 2023 as evident in the second-highest inflow year on record for global ETPs, with $965.4B added. A record-breaking year for fixed income ETP adoption aided the advance, where $331.9B of buying was driven by increases across the fixed income spectrum. Strong conviction in rates through the year gave way to spread assets towards year-end alongside the broad risk rally, as highlighted by a combined $29.1B to credit ETPs alone in Q4.”
High tide: over 2023, $965.4B was added to global ETPs – making it the second-highest inflow year on record, behind 2021’s record $1.3T.
A record year: fixed income (FI) set a new annual inflow record in 2023, with a bumper $331.9B added. Equities registered their second-highest inflow year ($640.3B), falling short of 2021’s record $1.0T. Commodities saw a third consecutive year of outflows (-$15.4B).
Q4 risk rebound: risk appetite returned in Q4, with $274.1B of inflows into equity ETPs – the third-highest quarter on record, and over $100B higher than any other quarter in 2023. In FI, Q4’s $97.6B was the second-highest quarterly flow level on record – second only to Q2 2020 ($109.3B).
Late-year conviction
Q4 marked a shift in investor appetite for risk across asset classes – in fixed income, not only did a combined $29.1B go into credit ETPs over Q4, but rates flows fell to $31.9B – their lowest level since Q1 2022. The increase in conviction was underscored by HY flows, which flipped from net outflows of -$8.0B as late as 27 October to finish the year at $9.1B.
Q4 was the best flow quarter for US equities on record ($196.9B), helped by $97.2B of inflows in December, which smashed the previous record set in December 2021 ($87.8B) and was led by US-listed ETPs. It also marked the highest inflow month for EM equities ($22.3B) since January 2022 – the third-highest month on record. In line with the 2023 trend, flows into APAClisted ETPs led the way, but a sizeable uptick in US-listed EM equity flows came through in December ($6.7B) – the highest level since January 2023.
A record year
No single exposure drove the record inflow year for FI ETPs: while rates led overall, with $170.7B added – accounting for 51% of FI flows – this was down from $190.8B (just over 70% of FI flows) in 2022. Within EMEA-listed FI ETPs, new yearly records were set for rates ($37.8B) and investment grade (IG, $18.1B).
Credit flows ended 2023 in positive territory, with $45.2B added to investment grade (IG) and $9.1B to high yield (HY) ETPs, supported by buying in Q4, while multi-sector ETPs increased in popularity over the year to end at $86.3B. Emerging market (EM) debt also reversed 2022’s $8.0B of outflows with $9.6B of buying. 2023 FI flows were largely unaffected by a record outflow year for inflation-linked ETPs, which lost $20.7B, following on from the $15.1B out in 2022.
Diverging trends in Europe
European FI proved popular in 2023, with a record $38.2B added, and $29.0B to eurozone FI alone – another record. In contrast to the global trend, flows into European FI were more evenly split between rates and credit, with sustained interest in European credit across the year.
European equities closed 2023 up $7.7B, despite seven net outflow months across the year, helped by late-year buying in December ($3.0B); this partly retraced the $16.7B of outflows in 2022. International investor interest – as measured by flows into US-listed European equity ETPs – turned positive in December ($0.6B) for the first time since May.
Up in quality
Amid the broad lack of conviction that characterised the year, one sector stood out: tech ($52.2B) accounted for almost all sector flows in 2023 – well above the next most popular sector (financials, with $3.8B added).
The tilt to quality also came through in record flows into quality factor ETPs ($36.0B), while value marked its lowest flows in four years ($5.3B), despite buying in three of the four quarters. The lack of risk conviction didn’t translate into strong flows into minimum volatility ETPs, which registered outflows of -$16.4B.
Financials overcame a lacklustre middle part of the year to end in positive territory, with Q4 inflows ($2.8B) offsetting outflows in Q3 and flat flows in Q2. The rotation into risk came at the expense of healthcare in Q4 (-$3.3B), leaving 2023 flows at -$2.3B overall.
Commodities out of favour again
Commodity ETPs (-$15.4B) saw a third consecutive year of outflows – the third-highest on record. Selling was centred in gold (-$13.5B): it was the second-highest outflow year on record for the precious metal, with only three inflow months across the year. In contrast to 2022 and 2021, when US-listed ETPs led gold outflows, 2023 outflows largely came from EMEA-listed exposures (-$10.0B).
Broad market commodity ETPs marked their largest outflow year on record (-$3.0B), while silver also ended the year in negative territory, with $1.0B of outflows.
Source: ETFWorld.co.uk
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