BlackRock Global ETP Flows : Flows to global ETPs picked up in February, to $99.6B, up from $74.4B in January.
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Global ETP Flows February 2022
Despite Russia’s invasion of Ukraine feeding into market volatility into the end of the month, flows to global ETPs picked up in February, to $99.6B, up from $74.4B in January.
In contrast to January – which marked the first negative month for fixed income since March 2020 – flows returned to the asset class in February, with $16.0B added.
Equity flows also rose to $75.5B, up from $68.6B in January, while increased allocation to broad commodity and gold exposures pushed commodity flows up to $6.5B, the highest level since July 2020.
Europe flows ebb
After building momentum over January and into the first week of the month, investors started to turn negative on European equities from mid-February –prior to Russia’s invasion of Ukraine –although flows remained positive overall, with $2.5B added.
Outflows came largely from broad European equity exposures. On a regional level, EMEA-listed ETPs dominated selling, with US flows dropping in absolute value but remaining positive. The trend of US-listed European equity inflows outpacing EMEA-listed peers is reminiscent of what we saw in 2020.
Interest in rates
A pickup in rates buying helped push overall fixed income flows higher, with $11.5B added –including $4.6B in the week of 20 February alone –marking a tilt amid geopolitical escalations. While the majority went into US rates –as usual –eurozone flows increased to $1.3B, the highest level since July 2021.
Inflation-linked bonds registered net outflows (-$2.6B), but showed signs of shifting with the market environment towards the end of the month: $0.2B was added in each of the last two weeks of February into US-listed US inflation-linked products.
Investment grade (IG) credit flows also rose significantly, with $5.7B added in February –the highest level since August 2021. Inflows went entirely into US-focused IG, amid outflows from eurozone and global exposures. The appetite for credit was not across all grades: high yield (HY) outflows slowed but remained negative at -$3.6B, with selling across geographic exposures, albeit led by US-focused HY.
Shifting trends
February sector flows diverged from the trends seen over the past few months. While financials remains the most popular sector YTD, the sector saw a net sell (-$1.3B) after turning negative in the last two weeks of the month, as investors digested the Russian invasion of Ukraine and its implications on inflation and central bank policy. Outflows were led by US financials, with European financials registering a small net sell. At the same time, tech flows picked up to $1.8B, and healthcare turned negative with -$1.5B out. Energy was the only sector where flows remained fairly consistent, with a further $1.5B added to January’s $3.1B.
Factor trends stayed relatively in line with January, with increased buying of value ETPs ($2.7B) and continued allocation to quality, albeit at lower levels ($0.5B). Minimum volatility –which had registered inflows in three of the past four months –turned negative again, with -$0.8B of outflows.
Commodity flows ticked up vs. January with $6.5B of inflows (vs. $5.6B in January), with broad commodity ETP inflows rising to $4.0B. Gold buying actually fell MoM to $2.2B, with no visible pickup in flows around the time of the Russian invasion.
Sustainable buying drops
Flows into sustainable ETPs dropped in February, in the lowest inflow month for US and EMEA-listed exposures in 12 months. $5.4B was added across the month, with $4.4B going into EMEA-listed products, and $1.0B into US-listed products.
EMEA-listed buying was led by fixed income ESG best-in-class strategies ($1.6B) –bucking historical trends, which point to equity best-in-class (BiC) strategies leading the way. Equity ESG BiCstrategies, in contrast, were down to $0.9B vs. $3.5B added in January. Within equity ESG BiC, eurozone exposures led with $0.8B added, while US exposures, which historically have been a flow leader, dropped to $0.2B from the previous month’s $1.2B. Inflows into Europe exposures also dropped to $0.2B, down from January’s $0.9B. Equity screened strategies posted a turnaround, with $0.9B added after outflows of -$0.2B in January, while climate equity strategies gathered $0.3B, down on the exposure’s six-month flow average of $0.7B.
Flows into US-listed ETPs of $1B came in below the 12-month average of $2.5B, with equities accounting for the majority of inflows ($0.7B). ESG optimised strategies ($0.5B) and ESG BiCstrategies ($0.4B) led February buying, while environment-based strategies lost -$0.3B –in line with outflows in December and January.
Source: ETFWorld.co.uk
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