BlackRock ETP Landscape: Global flows into ETPs remained strong in January, with $66.5B added, down from a bumper $85.8B of inflows in December (the second highest inflow month on record)……
Global ETP Flows January 2020
The drop in flows from December can be attributed to less buying in equity ETPs, as fixed income and commodity flows increased month-on-month. Fixed income ETPs gathered $24.9B, marginally up from December ($24.4B), while commodities reversed the -$0.2B outflows in December with $5.1B of inflows – c.60% of this went into gold ETPs.
Key themes in January:
- Buying broad: broad developed market (DM) equity flows increase
- Coming off highs: high yield (HY) flows fall to $0.2B
- A golden start: gold flows increase tenfold
- Inflows into equity ETPs, while remaining positive, reduced across most exposures in January. Buying in US equities fell by around 60%, to $14.0B, while EM equity flows dropped from $17.1b in December to $5.5B.
- Broad DM equity ETP flows were an exception, remaining steady for the third consecutive month at $13.4B. Flows into Japanese equity ETPs increased significantly from $0.8B in December to $4.6B in January – although most of this went into APAC-listed funds and can be attributed to c.$4B of buying by the Bank of Japan. Inflows into EMEA-listed Japanese equity ETPs fell to just $0.2B, while outflows from US-listed Japanese equity ETPs increased to -$0.6B.
- The UK wasn’t alone in leaving the European Union in January, as investors sold Eurozone and German equities, contributing to the first outflow month for European equities since August (-$1B). Flows displayed a domestic selling bias, with EMEA-listed European equity ETPs registering outflows while US-listed counterparts gained inflows of $0.3B.
Coming off highs
- Buying in fixed income was quite varied in January, with multisector ETPs – those tracking broad bond indices that span across ratings – proving most popular, with $8.9B of inflows. Emerging market debt (EMD) and investment grade (IG) flows also picked up, helping to offset a drop in interest in HY – where inflows fell from $2.9B in December to just $0.2B in January.
- Reduced interest in HY in January comes after a bumper 2019 for the exposure; HY registered inflows in each quarter last year for the first time (a record $25.5B was added overall). Inflows into European HY and DM HY on the whole last month offset outflows from US HY.
- IG flows, on the other hand, have been fairly consistent since January 2019, with only one outflow month over this period, in August 2019. Inflows of $4B in January went predominantly into US-focused IG, while money was also added to eurozone and global exposures. UK IG lost $0.2B – the third outflow month for the exposure in the past four.
A golden start
- Silver registered its first inflow month in five with $52m of inflows in January, as increased market volatility led investors back to precious metals.
- Gold flows increased tenfold to $3.1B from $0.3B in December, which came after outflows of $1.4B in November. Flows were tilted into EMEA-listed gold ETPs, which gathered $1.7B, leading US-listed flows for a second consecutive month – US gold ETPs gained $1.4B in January, following flat flows in December.
- Crude oil ETP flows also jumped back into positive territory with $0.9B of inflows in January, following two months of outflows. January’s flows were also the highest monthly inflow since November 2018. Investors didn’t really warm to the commodity last year, with $2.4B of outflows, $1.2B of which came in November and December.