BlackRock Global ETP Flows : Flows slow: Allocations to global ETPs fell for the fourth consecutive month in January, to $62.6B, largely due to reduced equity buying at the start of the month.
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BlackRock Global ETP Flows January 2023
Bonds in favour: Equity flows fell from $43.1B in December to $32.8B in January, while fixed income flows ticked up to $28.7B (from $28.3B in December).
Commodities turn positive: commodity ETPs ($0.9B) notched up the first inflow month since April 2022
Europe on the agenda
US equity ETPs (-$1.7B) saw outflows across listing regions in January –the first monthly net sell since April 2022. While some US outflows can be attributed to tax-loss harvesting, US-listed US equity actually finished the month flat, with outflows led by their EMEA-listed peers (-$1.1B).
Flows into European equity ETPs, in contrast, were significantly up on the month. European equity ($7.3B) saw the largest inflow month since January 2022, led by US-listed European equity exposures –highlighting investors’ shift beyond the domestic market. The $2.1B added to EMEA-listed European equity included sector allocations to financials and consumer staples, strongly led by broad market ETPs.
Sector flows point to selective risk-taking in US equity, with increased flows into materials ($0.9B) –the largest monthly level since March 2022 –and industrials ($0.8B). 2022 winners had a tougher month, with outflows from healthcare (-$1.0B) and tech (-$0.1B).
A bIG month for credit
Investment grade (IG) credit ($12.6B) registered the third-largest inflow month on record in January –the largest monthly net buy since June 2020. This positive sentiment carried over to high yield (HY, $2.4B), which reversed December’s outflows of -$0.9B.
The re-risking trend is clear in EMEA-listed ETP flows. Allocations to EMEA-listed HY and IG accounted for 37% of global flows –and an even larger share of EMD (53%) –but c.1% of US Treasury flows. In contrast to 2022 trends, EMEA-listed ETP flows tilted towards full-duration credit: –just 3% of EMEA-listed IG flows went into short-duration, in contrast to c.17% of global IG ETP flows. Overall, UCITS investors showed a strong preference for EUR vs. USD exposures.
Emerging sentiment
Flows into EM equity reached the highest level in a year in January, with $15.9B added. In line with the trend seen in European equity, US-listed allocations ($9.0B) once again led the way, supported by EMEA-listed inflows ($5.3B). Global flows into EM equity were split between broad ($8.6B) and single country exposures ($7.3B).
China ($6.4B) was the stand out among EM single exposures, following inflows of $8.9B in December. January saw $1.8B added to EMEA-listed China ETPs, matching the previous monthly record set in June 2022. US-listed allocations ($2.1B) rose 3.5x on the month, the highest monthly level since June 2022.
EMD also notched up a second consecutive month of inflows, with $2.2B added in January, following $2.9B in December. This also follows the first outflow year on record for EMD, with $9.0B lost in 2022. The inflows also come in tandem with re-risking across fixed income (see previous page for more).
A sustainable start to the year
Sustainable ETP flows in January remained in line with December 2022 levels, with $4.8B added across the US and Europe. EMEA-listed ETPs ($5.7B) saw flows rise from $4.3B previously, while the US (-$855m) recorded even stronger net outflows than December’s -$100m.
Within Europe, equity ETPs dominated sustainable flows, with $3.6B added –the highest level since July 2022 –led by ESG best-in-class strategies ($1.5B). At a regional level, EM equity ($537m) led the way, followed by global exposures ($400m). EMEA-listed fixed income flows ($2.1B) were consistent with December levels ($2.4B). ESG best-in-class strategies led buying with $1.6B added, predominantly into eurozone ($563m) and US exposures ($392m).
In the US, sustainable flows were driven by fixed income ($124m), reversing December’s net outflows of -$109m. Buying was led by ESG Optimised strategies in US exposures ($313m). Equity saw net inflows into sustainability-related ($33m) and climate-exclusive ($13m) strategies.
Source: ETFWorld.co.uk
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