Highlights: US equities and emerging market equities were the most popular exposures in October, gathering $8.1bn and $3.6bn respectively……
Marchioni Ursula – Head of ETP Research EMEA at iShares
US equity flows reflect different sentiment between US and European investors: US-domiciled investors invested $8.6bn mostly into broad S&P exposures, while European investors took a total of $0.4bn out of US equity exposures.
Inflows of $1.3bn into US financials, consisting of $417m from European investors and $790m came from US investors.
Credit has been in favour this month for European investors, with $730m and $600m flowing into Eurozone and US corporate bond ETPs respectively. Unlike European investors, US investors have expressed a much more bearish outlook on US corporate bonds ($1.5bn in outflows), instead favouring US aggregate and Euro aggregate bond exposures.
TIPS and other inflation-linked ETPs gathered over $1.5bn in October – up from $0.68bn in September – supported by the oil price rebound.
Inflows into precious metals persisted in October supported by uncertainty around US election: gold and silver products gathered $1bn and $150mn, respectively, over the course of the month.
Crude Oil ETFs saw $1.1bn in outflows.
Quote from Ursula Marchioni, Chief Strategist for iShares EMEA at BlackRock
“The concerns of European investors about the domestic banking sector have not dissipated and flows into European financials were virtually non-existent in the month of October. This contrasts the large inflows of around $400m from European investors into US financials.
“Investors continued to add to their emerging market (EM) exposures, pouring $3.6bn into EM equities in October alone, largely through broad EM indices. EM debt exposures remained in demand as well, gathering $600m supported by investors’ ongoing hunt for yield.
“Inflows into gold accelerated in October – the industry has seen close to $1bn in inflows – as investors seek out a safe haven ahead of political uncertainty such as the US election.
“The Brent oil price dropped 1.7% in October as the prospects of an OPEC deal to limit production have remained uncertain. This resulted in outflows north of $1bn in crude oil ETPs over the course of the month which is in sharp contrast to the $435bn in inflows observed in September.”
“Ahead of the US election, flows into US equities were more volatile than in Q3, but net positive on the month.”