Vanguard European ETF market review: European-domiciled ETF flows returned to negative territory in September. The ETF market saw -$5.8 billion of outflows in September, after experiencing $1.3 billion of inflows in August[1].
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Vanguard European ETF market review September 2022
Highlights
– Fixed income was the primary driver of outflows from European ETFs, with -$3.6 billion of investor redemptions over the month. The previous month, the asset class saw positive flows of $5.3 billion.
– Equity ETFs were the second-largest detractor, with -$1.9 billion of outflows, after suffering -$3.3 billion of redemptions in August.
European-domiciled ETF flows returned to negative territory in September as risk assets sold off in the face of major central banks’ ongoing resolve to stem inflation with higher rates. The ETF market saw outflows of -$5.8 billion in September, with equity (-$1.9 billion), fixed income (-$3.6 billion) and commodities (-$217 million) products all contributing to overall negative outflows. In August, overall ETF flows were positive to the tune of $1.3 billion.
Within equities, smart beta (-$3.7 billion), core (-$2.5 billion) and ‘market access’[2] (-$888 million) strategies were the most significant drivers of outflows, pushing the net flow from the asset class into negative territory (-$1.9 billion) over the month. Smart beta ETFs mainly saw outflows from United States strategies (-$3.6 billion), while global smart beta products contributed inflows of ($122 million). Outflows from core ETFs were driven by global (-$2.2 billion), Switzerland (-$529 million) and Australia (-$335 million) exposures, while emerging market products took in $501 million of new assets. Outflows from ‘market access’ equity ETFs saw assets leaving mainly through China (-$590 million) and Asia (-$238 million) exposures. Equity outflows were offset in part by flows into sustainable equity exposures, which continued to lead the inflows in September, taking in $6.3 billion. Of this, the large part of the inflows went into United States ($5.2 billion), world ($637 million) and Europe ($416 million) sustainable products. Emerging market sustainable exposures saw outflows of -$149 million.
In fixed income, total outflows of -$3.6 billion were primarily driven by investors pulling assets from government (-$1.6 billion) and high-yield (-$1.6 billion) exposures. Within government bond ETFs, emerging markets (-$1.4 billion), China (-$945 million), Italy (-$415 million) and eurozone (-$385 million) products were the key drivers of outflows, while flows into United States ($1.3 billion) and United Kingdom ($175 million) ETFs contributed positively. Outflows from high-yield vehicles were almost entirely attributable to assets moving out of United States (-$1.4 billion) and eurozone (-$189 million) regional exposures. Negative overall flows from bond ETFs were partly offset by positive flows into ultra-short maturity ETFs ($840 million), with eurozone ($443 million), Germany ($151 million), United States ($141 million) and United Kingdom ($103 million) products the most popular with investors.
Commodity ETFs suffered redemptions of -$217 million in September, mainly driven by precious metals (-$258 million) and broad excluding-agriculture (-$75 million) exposures.
[1] Source: Vanguard, ETFbook, as at 30 September 2022. Data extracted on 5 October 2022.
[2] Source: ETFbook, as at 30 September 2022. The ‘market access’ category includes difficult-to-access markets such as emerging markets.
Source: ETFWorld.co.uk
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