BlackRock ETP Landscape: October marked another strong inflow month for EMEA-listed ETPs with $15B invested, albeit down from $20B of inflows in September….
EMEA-listed ETP Flows October 2019
Flows into equity ETPs moderated to $8.3B in October, down from $13.8B in September.
Fixed income gained $4.9B, while inflows into commodity ETPs increased to $1.6B.
Key themes this month:
- The Europe comeback?: A second consecutive month of European equity inflows
- Quality fixed income: Investment grade (IG) and rates inflows continue
- Value in vogue: October was the biggest inflow month of the year for the value factor
The Europe comeback?
- European equites gained their largest inflow month this year with $4.4B added in October.This marked the first time the exposure has received positive inflows in consecutive months since October 2018; investors have bought $7.9B of European equities since September.Despite the improvement in sentiment towards European equities, net flows this year still remain negative at -$4B.
- Investors tempered their buying of US equities to only $0.2B in October after September’s record inflows (+$5.3B). Despite lagging European equity inflows in October, year-todate flows into US equities are significantly higher, at $10B YTD.
- Investors have continued to sell emerging market (EM) equities for a third consecutive month, with $0.3B of outflows in October. These outflows come despite an apparent deescalation in global trade tensions, but the October figure does mark a slight improvement from September (-$1B).
Quality fixed income
- Investors continued to favour quality in fixed income in October: investment grade (IG) and rates gained the lion’s share of flows, with +$1.2B and +$1.8B respectively, while investors continued to sell high yield (-$0.1B). Rates and IG have not had a negative flow month so far this year – this 10 month streak has been their longest on record.
- EMEA investors have favoured fixed income exposures throughout the year and YTD net flows stand at $55B. In comparison, equity inflows have totalled $30B YTD.
- Emerging market debt (EMD) gained another $0.9B in October. Investors favoured local currency ETPs (+$0.8B), while selling hard currency ETPs (-$0.1B). Investors had favoured LC early this year, but sold the exposure heavily in May. More recently, sentiment has begun to revert.
Value in vogue
- Value ETPs gained $0.4B in October – the biggest monthly inflow into the exposure this year – sending the factor’s YTD flows back into positive territory. Value only gainedinflows of similar magnitude in March 2019, when investors bought $0.3B. Investors sold minimum volatility (min vol) ETPs for a second consecutive month (-$0.2B), although min vol remains the most popular factor this year with net inflows of $3.3B YTD.
- Commodity flows picked up to $1.6B after dropping to $0.7B in September. The majority of inflows were allocated to gold ($1.2B) amid market volatility. Silver flows were flat for October but recovered from the -$0.1B of outflows in September.