BlackRock Global ETP Flows : A summer lull? Heading into the summer, a lack of conviction has come through in global ETP flows.
Sign up to our free newsletters
Global ETP Flows June 2022
Bond flows fall: global ETP flows have fallen MoM from $86.6B in May to $36.2B in June, with the drop in headline flows attributable to fixed income, where buying has fallen from $35.3B to $3.0B in June, and commodities, which have registered net outflows for a second consecutive month.
Getting selective: equity flows fell from $54.7B in May to $43.8B in June, with increased selectivity in regional allocations, particularly in EMEA-listed equity ETPs.
Selectivity in equities
Headline flows into regional developed market (DM) exposures highlight a drop in buying in June, with US equity flows falling from $48.9B in May to $25.8B in June, and European equity ETPs notching a fourth month of outflows (-$4.3B). Emerging market (EM) equity ETPs were the biggest regional allocation in June, with $5.7B of inflows; $2.0B of this went into EMEA-listed ETPs.
More broadly, flows into EMEA-listed equity ETPs reflected increased selectivity, with outflows from US equities (-$0.9B), and European equities (-$0.8B) alongside the EM inflows.
Within the overall slowdown in equity flows, one clear trend has come through: international investors have started to allocate to China, with June registering the biggest month of inflows on record for US ($4.0B) and EMEA-listed ($1.8B) Chinese equity ETPs.
Cooling on spread assets
Credit flows turned negative again in June, with $4.5B out of investment grade (IG) and $5.5B out of high yield (HY), reversing the $3.9B and $3.8B added to these exposures, respectively, in May. June was the largest outflow month for IG since March 2020 and the second-highest on record, while HY outflows were the third-highest on record. Flows into IG ETPs remain positive so far this year ($9.4B), while HY is on track for its highest outflow year on record (-$18.3B YTD).
EM debt flows were negative for a third consecutive month, with $2.7B out in June, but saw a marked change in composition. In May, outflows were almost entirely out of Chinese bonds (-$4.5B), but these outflows moderated in June to -$0.7B, with broad EM debt accounting for a larger proportion of selling.
Global rates flows – predominantly into US Treasuries – dropped from $26.1B in May to $16.0B in June. Within EMEA-listed rates ETPs, short-duration flows were roughly flat, while intermediate-term flows led the way, with $1.9B added.
Health check in sectors
Healthcare was the most popular sector allocation for a third month in a row, with $1.5B added, amid a broad reduction in allocation to sector ETPs, and outflows from more cyclically-tilted exposures. Tech flows followed, with $0.8B added, while utilities also saw positive flows ($0.4B).
At the other end of the scale, financials continued to be sold, with $3.6B out, while energy outflows accelerated (-$3.0B). So far this year, energy flows stand at $3.1B, while tech still leads the way with $16.8B added, and healthcare is in second place, with $11.9B.
Defensiveness has come through in factor flows too: quality notched up a further $1.2B of inflows in June, while value flows turned negative with $0.9B out. Low volatility factor ETP flows were flat, meanwhile.
Sustainable ticks up
Flows into sustainable ETPs picked up in June, with $2.3B added across US- and EMEA-listed products. While sustainable flows for the European market continue to trend downwards, totalling $1.5B for the month, US sustainable flows reversed from negative territory in May to net inflows in June ($0.8B).
Taking a closer look at EMEA flows, buying was diversified across US, Europe, EM and world exposures. Equity flows were led by ESG best-in-class strategies ($0.6B), followed by exclusionary exposures ($0.5B), and ESG optimised strategies ($0.2B). Flows into climate-exclusive strategies also picked up, with $0.2B added in June.
EMEA-listed sustainable fixed income strategies registered $0.2B of selling, with the largest outflows from the ESG best-in-class space (-$0.8B). In line with the pickup in equity inflows, climate-exclusive strategies gathered net inflows ($0.4B), mainly driven by European Paris-Aligned Benchmark (PAB) exposures.
In the US, equities accounted for $0.7B of the $0.8B of sustainable inflows, split among climate-exclusive ($0.2B), exclusionary approaches ($0.2B), and ESG best-in-class strategies ($0.1B). Fixed income inflows totalled $0.1B and were largely into ESG optimised strategies.
Source: ETFWorld.co.uk
Subscribe to Our Newsletter
