Amundi ETF : During the month of September, the ETF market attracted €58.1bn in-flows worldwide, with strong divergence between equity and fixed income.
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Amundi ETF Market Flows Analysis with data as of end September 2023
Ashley Fagan Global Head of ETF, Indexing and Smart Beta Strategic Clients Head of UK & Ireland Strategy and Business Development
Despite world equity indices declining by 1.9% in euro terms in September, global ETF investors added €45.5bn to these strategies whilst fixed income strategies gained only €12.1bn.
In the global ETF market, investors allocated €20.3bn to world equity indices and €8.4bn to US equities.
Ultrashort bonds collected €5.5bn while investors withdrew €4.4bn from corporate bonds.
European Flows – Monthly Overview
Equities
European UCITS equity ETFs gained €7.3bn in September, taking third-quarter in-flows to €20.5bn.
US equities were the most popular strategy gaining €4.2bn with investors also adding €3.4bn to developed world indices. This confirms the trend observed during the last quarter. Investors withdrew €1.1bn from developed Asian strategies.
In September, the spike in oil price over the summer encouraged investors to allocate €0.4bn to energy sector strategies whilst they withdrew €0.5bn from financial ETFs. ESG equity ETFs gained €1.4bn during the month with investors adding €1bn to world indices and €0.8bn to US equities. Less than 20% was allocated to ESG strategies of total equity allocations in September, which is lower than average. This could indicate many investors may have made a tactical allocation to equities to take advantage of better-than-expected economic growth.
Fixed Income
Flows into debt strategies were much lower in September than in recent months with European UCITS fixed income ETFs gaining €1.9bn. All of these in-flows were into government bonds (€2.3bn) with no flows into corporate bonds. Investors withdrew €0.4bn from high yield strategies probably reflecting concerns about the macro backdrop and higher funding costs that could affect margins.
With yields at historically high levels, inflation expected to slow and recession risks still very present, government bonds offer good opportunities. Based on this, investors decided to allocate €2.2bn to euro- denominated government debt and €0.6bn to US dollar-denominated government bonds. While investors favoured all maturity euro benchmarks with this gaining €1.4bn, those allocating to US-denominated preferred short-dated strategies with these adding €1.2bn.
The debate on fixed income remains whether peak interest rates have been reached or whether there is further to go. Those thinking peaks have been hit are investing in longer duration while those who think there is more to go favour shorter duration.
ESG fixed income strategies gained €0.7bn with investors allocating €0.3bn to government bonds and €0.2bn to investment-grade corporate debt. In other words, around a third of the allocation to fixed income is to ESG strategies. The development of ESG government products could support the case for ESG investing.
Source: ETFWorld
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