BlackRock Global ETP Flows : Flow pickup: flows into global ETPs rose to $77.3B in May, up from $53.5B in April, with a pickup across asset classes. Headline flows into US and EMEA listed sustainable ETPs also increased to $5.2B.
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BlackRock Global ETP Flows May 2023
Laura Cooper, Senior Investment Strategist of iShares EMEA at BlackRock
Discussing the report, Laura Cooper, senior macro investment strategist for iShares EMEA at BlackRock said, “ETP flows continued to rise throughout May, as headline flows into US and EMEA-listed ETPs grew. Notably, gold ETP flows remained strong, having added USD4.3 billion since March. Demand was driven by investors looking to gold to help diversify portfolios, whilst the gold price remains elevated amid market volatility and both central bank and retail buying. There was also significant pick up in investment grade credit, while rates ETP inflows almost doubled from April to May.”
May 2023 Global ETP Report
- Rising tides: equity flows came in at $41.8B, up from April’s $26.9B, while fixed income (FI) flows rose to $33.1B. Commodity flows driven by buying in gold increased to $1.8B.
- Getting granular: US equity flows ticked up for a third straight month to $22.1B the highest monthly level this year accounting for just over half of all equity flows, while rates ($14.7B) led bond buying.
Shopping abroad
International investor interest in Europe and emerging market (EM) equity markets has been a key theme YTD. While Europe ( (–$1.2B) turned negative in May, flows into US listed European equity ETPs remained positive, albeit at a lower level of $0.4B. The $9.9B of inflows into US listed European equity YTD far outpaces the $3.9B to EMEA listed ETPs, and has proven sticky vs. history.
In EM, headline equity flows increased to $13.1B: while the vast majority went into APAC listed ETPs ($11.2B), this masks continued allocation to EMEA listed ETPs, with $1.3B added in May, up from $1.0B in April.
International investors have favoured broader exposures this year and this trend continued into May. International interest in Japan has also continued to pick up, with a combined $1.9B into EMEA and US listed Japan equity ETPs in May, building upon the $1.4B added in April.
Gold shines
Inflows of $1.9B into gold drove overall commodity buying in May, with the headline figure coming in at $1.8B after outflows from broad market commodity exposures. Gold has now added $4.3B since March: events in the banking sector, compounded by uncertainty over the US debt ceiling sparked renewed interest in the precious metal after a cumulative $25.5B out from May 2022 to February 2023.
Silver flows have historically tracked gold, yet this hasn’t happened in 2023: rather, silver saw buying in January February but turned negative when gold flowspicked up, leading to a cumulative –$0.2B out over the past three months. The last time silver and gold moved in opposite directions was August November 2021, with no clear catalyst for this dynamic.
IG leads again
A significant pickup in buying across rates and multisector ETPs drove FI flows higher in May, with rates inflows almost doubling from $8.6B in April to $14.7B in May. Multisector ETPs, which tend to have exposure to the broadest FI indices, alongside other strategies, saw $12.9B added, up from $7.1B in April.
The $5.2B into global investment grade (IG) ETPs in May was relatively evenly split between US ($1.5B) and EMEA-listed ETPs ($1.3B), in contrast to April where EMEA-listed flows accounted for 79% of total IG flows. Given the uptick in US-listed flows, the proportion of flows going into $IG also increased, although there is still a sizeable amount of money going to EUR IG exposures –$956m in May, following $1.9B in April. An up-in-quality approach was also evident in the $1.7B added to EMEA-listed sustainable FI ETPs –the highest level since January.
The preference for Europe has also carried through to high yield (HY). Despite outflows from global HY (-$1.8B) in May, small inflows of $0.2B into eurozone HY exposures marked three consecutive months of buying, in contrast to May USD outflows.
Tech leads sector flows
Sector flows in May were slightly skewed by rebalancing-related activity towards the end of the month. This meant that tech flows led globally in May ($15.9B), but $5.5B of this reversed on 1 June alone, moderating the overall allocations. Looking at flows on a weekly basis –which may be more instructive in this case –the tech sector has now seen six consecutive weeks of buying. It is decidedly the most popular sector globally YTD, as part of a broader defensive shift that has come through in sector flows.
Staying in defensives, flows into healthcare remained positive in May ($1.0B) for a second consecutive month, with a higher proportion going into US healthcare MoM. This contrasted with cyclical outflows: May saw net sells of -$0.9B from both industrials and materials, and a sixth consecutive outflow month for energy, while financials flows (-$2.5B) turned negative for the first month in five.
Source: ETFWorld.co.uk
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