BlackRock Global ETP Landscape Report and European-Domiciled ETP Flows January 2017

Global reflation trends propel global ETPs to the best monthly flows since 2008 and the best January flows on record…….

Patrick Mattar, from the capital markets team at iShares

Global ETPs brought in $61.2bn in January, marking the best monthly flows since September 2008 (the second-best on record) and record January flows, fueled by strength in U.S. and Japanese equities

U.S. equities drew in $19.3bn as global reflationary trends bolstered cyclical exposures including $4.3bn in small-caps and over $1bn a piece in real estate, technology and financial equity sector funds

Japanese equities brought in record monthly flows of $10.7bn fueled by a weaker yen, rising inflation and better earnings expectations

Broad emerging markets (EM) equities gathered $2.5bn amid a more measured U.S. dollar and a pick-up in global reflation

Fixed income gathered $16.6bn focused in shorter maturities and in investment grade corporates as flows remain resilient to rising rates

Patrick Mattar, from the capital markets team at iShares, comments on the five key stories behind the European ETP flows in January

Equities on the up: the reversal continues

“For the fourth month in a row flows into European-domiciled equities funds surpassed fixed income, as investors respond to higher interest rates, reflation prospects and broadening of the global macroeconomic recovery. However, fixed income flows remained positive with clear trend towards EM debt amongst European investors”

Developed equities: Europe riding US coattails  

“Investors have been buying equities in both Europe and the US reflecting a renewed appetite for risk. Funds with US exposure have seen consistent inflows since 2016 driven by the macro recovery, and now European flows are also benefiting from a better earnings picture and stronger macro data in the region.”

Commodities: gold flows diverging by domicile

“Gold flows diverged by region with Europe investors buying but global investors selling in response to the rising rate regime in the US? Globally?. This dynamic suggests European investors are currently more focused on portfolio diversification than those elsewhere.”

Emerging markets: European investors buying debt, global investors focussed on equity

“From the start of this year global flows have picked up in both fixed income and equity although this masks the true picture. In fact, European investors have been buying EM debt and selling EM equities while investors elsewhere were more focused on equities. Historically, EM assets have performed strongly in an environment where USD is weakening and this has tended to be an indicator of flows into EM ETFs. Despite the favourable environment the current dynamic would suggest that European investors are more risk averse than global peers at present.”

Japan: equity flows driven by BOJ

“The Bank of Japan has been buying Japan-listed ETFs since the start of 2013 when President Abe came to power, and this was once again the key driver behind January flows.

“European-domiciled funds attracted around $100m of net inflows. This is the fourth consecutive month of inflows following a 9-month period during which European investors withdrew $7bn from Japanese Equity ETPs.”


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