BlackRock ETP Landscape: $2.3B was added to EMEA-listed ETPs in May in the lowest inflow month of the year so far. …
Fixed income flows dropped to just $715m, down from $4.7B in April, while equity flows ticked up to $1B.
Commodity ETPs gathered $440m, the largest inflow for the asset class since January.
Key themes this month:
Inching back to US?
US equity ETPs led equity inflows in May with $1.6B added, in the largest monthly inflow to the exposure since October 2018. This follows $0.3B out in April.
Looking across the whole of 2019, EMEA investors have appeared to lack conviction on US equities, with two inflow months and two outflow months prior to May, which takes the YTD net inflow figure to $1.3B. This mixed picture started to appear in December 2018, following 19 consecutive months of inflows.
EM equity ETPs lost $0.3B in May, in the first outflow month since August 2018 for the exposure. Investors continued to sell European equities for a fourth consecutive month with another $0.9B out in May, albeit not as much as the $2.8B out per month in both March and April.
EMD falls out of favour
Outflows of $1.7B from EMD weighed on the headline fixed income flow figure in May. This marked the largest outflow month from EMD since November 2016, and the first outflow month since August 2018, at the time of the EM currency crises.
$1.5B of the outflows can be attributed to local currency EMD ETPs, which have been sold for five consecutive weeks, following consistent buying up until mid-April. Hard currency EMD flows have been a little more mixed, with inflow and outflow weeks netting out at -$0.2B for the month.
Interest in rates ETPs picked up following a lacklustre April, with $1.4B added in May. Simultaneously, buying in investment grade (IG) exposures more than halved from April to $0.7B in May, while investors sold high yield (HY) for the first time this year in May (-$0.6B).
Gold swings positive
Gold ETPs gathered $0.8B in May, following $300m out the month before. Investors added a bumper $1.6B in December, followed by $0.9B in January, but sold the exposure in the subsequent three months of 2019.
Despite increased market volatility this year, we haven’t seen a significant flock to safe-haven exposures, such as gold. This is similar to what we saw during the volatility episode in February 2018 (-$1B out of gold over this period). On the other hand, the spike in inflows in December –which came amid broad risk-off sentiment –does point to some safe-haven demand.
All figures in USD