BlackRock ETP Landscape: Flows into global ETPs dropped for a second consecutive month, with $95.6B added in May, down from $105.4B in April and a record $136.3B in March.
Global ETP Flows May 2021
- Equity flows were steady month-on-month, with $64.4B added, compared to $62.4B in April.
- Fixed income buying dropped to $23.3B, vs. $36.1B in April – negating the pickup in commodity flows, which turned positive ($6.5B) for the first time since January.
Europe in focus
While equity flows held steady at the headline level, regional allocations differed in comparison to April. European equity inflows of $8.7B – the largest inflow month for the exposure since May 2017 – showed continuing international interest, with flows into US-listed European equity ETPs ($5.8B) once again outpacing EMEA-listed flows ($2.9B).
Emerging market (EM) equity flows also recovered from outflows of -$1.7B in April to post $6.4B of inflows, with flows into EM single exposure ETPs outpacing broad EM for the first time since September 2020. Inflows into single EM ETPs continued to favour Asia, with South Korea and China leading the way in May.
At the same time, buying in US equity ETPs hit the lowest level in four months, with $28B added, vs. $36.4B in April, while Japanese equity inflows picked up to $5.1B, the highest level since January amid continued buying by the Bank of Japan.
Record month for linkers
Inflation-linked ETPs registered a record $4.4B of inflows in May, surpassing the previous record of $4.3B set in June 2020. May’s inflows also take YTD flows into inflation linkers past the annual record of $17.3B set in 2020, with the activity-led restart driving investor interest in building inflation protection into portfolios.
US-focused inflation linkers have inevitably accounted for the majority of flows, given the larger fund universe and that US inflation has been in focus across global markets, but eurozone and global products have also consistently gathered inflows this year. Eurozone inflation-linked ETPs have added $1B YTD – just behind the record $1.2B added in 2015 – while global linker flows have reached $1B YTD – just short of 2020’s record $1.1B.
Elsewhere in fixed income, trends were broadly in line with April flows, with buying in rates, multisector and EM debt ETPs. Credit ETP flows – which started to recover in April, with $6.3B added to investment grade (IG) and $3B to high yield (HY) – fell back in May, with $1B added to IG and $1.3B to HY.
Commodity flows returned to positive territory in May for the first time in four months, driven by record flows into broad commodity ETPs – $3.3B, up from $1.3B in April and the first inflow month for gold since January ($3.3B). The record monthly flows into broad commodity exposures were predominantly into US-listed ETPs ($3.2B), with EMEA-listed ETPs gathering $0.3B, on par with EMEA-listed flows in April.
Gold flows were more evenly split, with $2.1B added to US-listed ETPs and $1.4B into their EMEA-listed counterparts. Flows into EMEA-listed gold ETPs built upon the $0.4B added in April.
Flows into silver also returned to positive territory for the first time since January, with $0.4B added in May.
May saw a slight tempering of the flow momentum that sustainable ETPs have enjoyed for the past nine months. Monthly sustainable flows for US and EMEA-listed sustainable ETPs came in at $5.5B across asset classes, making May their quietest month since August 2020, and down from the February 2021 monthly record of $18B.
In Europe, ESG best-in-class funds brought in just under half of Europe’s $3.7B monthly total, led by World and US equity exposures. ESG-optimised equity strategies came within touching distance of $1B for their second-best month on record, with $966m of inflows driven by US and European exposures.