Amundi ETF : Investors added €54.1bn to global exchange-traded funds in April with equities gaining €31.2bn and fixed income strategies adding €21.4bn.
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Amundi ETF Market Flows Analysis with data as of end April 2024
Ashley Fagan Global Head of ETF, Indexing and Smart Beta Strategic Clients Head of UK & Ireland Strategy and Business Development
Investors added €54.1bn to global exchange-traded funds in April with equities gaining €31.2bn and fixed income strategies adding €21.4bn. These flows were lower compared to March, reflecting investors’ lack of clarity over the future direction of interest rates.
In the global ETF market, ultrashort bonds were the most popular strategy recording inflows of €7.4bn as investors took advantage of the yields offered by these products at minimal duration risk. Continuing the trend in fixed income from recent months, there were outflows in corporate debt and high yield strategies.
Large blend – US equity – indices gained €7.0bn, continuing the long-run trend. Japanese equities also maintained their momentum adding €3.4bn this month despite some investor concerns about valuations looking overstretched in this region.
European Flows – Monthly Overview
Equities
European UCITS ETF strategies gained €7.0bn in April. Developed market world indices attracted inflows of €2.2bn and European strategies added €2.0bn, with investors making the most of dividend season.
US indices accumulated €1.5bn and Japanese equities again proved attractive to investors, adding €1.2bn.
With interest rates looking like they will likely be higher for longer, investors added €0.5bn to financials, a sector that tends to perform well in higher interest rate environments.
Tech gained €0.5bn, underlining the continued outperformance of the ‘Magnificent Seven’. Investors withdrew €0.5bn from healthcare as appetite for defensive strategies faded.
No smart beta strategy made significant gains last month and investors withdrew €0.4bn from minimum volatility products.
Investors withdrew €4.0bn from ESG equity strategies, with US equity ESG products accounting for the bulk of those outflows.
Fixed Income
Investors allocated €4.5bn to European UCITS fixed income ETF strategies with government debt gaining €2.1bn, money market funds adding €0.8bn and investment-grade (IG) corporate gaining €0.7bn.
Euro-denominated government debt recorded inflows of €1.2bn. Investors assigned €0.5bn to long-dated EUR-denominated products, amid market expectations for a possible rate cut from the European Central Bank in June.
Long dated US-dollar denominated bonds gained €0.7bn, while short-dated attracted €0.4bn of inflows. This ‘bar bell’ approach to duration reflects different investor attitudes to the future direction of interest rates. Investors buying at the short-end of the curve are likely unclear about the trajectory of interest rates and are maximising the decent yield this end of curve offers with minimal duration risk.
In contrast, those adding to the long-end of curve think a rate cut is more likely, which would cause the price of their bonds to rise giving them an opportunity to make gains on these investments. The other reason to buy long-dated bonds is as a defensive play against a potential economic downturn.
In contrast to European equity ESG strategies, fixed income gained €1.1bn this month with €0.7bn allocated to IG corporate debt.
Source: ETFWorld
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