BlackRock Global ETP Landscape Report – March 2016

Highlights from February’s ETP flows data: Global ETPs gathered $9.4bn during February. Investors expressed a preference for safe-haven assets, with US treasuries and gold-based ETPs commanding the lion’s share of assets, generating $5.7bn and $7.2bn respectively….

Marchioni Ursula – Head of ETP Research EMEA at iShares

Having low correlation to the world equity and bond returns, gold tends to serve as a return diversifier when investors want to de-risk portfolios.

Weaker corporate earnings and macro picture reduced investor appetite for US and European equity risk. U.S. equity ETPs shed ($8.3bn) and European equity ETPs recorded ($4.2bn) in outflows

Minimum volatility fund flows climbed to a record $3.9bn for the month and over $5.3bn for the year, focused in U.S. equity-linked products as investors sought to mitigate higher volatility in the U.S. market.

$2.6bn of new flows was recorded for Europe-domiciled ETPs. Strengthening inflows in government bonds, with U.S. treasuries and European sovereign bonds recording $600m and $900m respectively, offset developed equity outflows of ($1.7bn). In line with global investor sentiment, gold was the favourite theme for European ETP investors, recording $2.4bn of new flows during the month.

Despite Japanese equities’ underperformance, local ETP investors continued to buy domestic equity exposures. The category saw monthly inflows of $2.3bn from local investors. Inflows however were offset at a global level, with U.S. investors selling ($2.1bn).

Ursula Marchioni, Chief Strategist, iShares EMEA at BlackRock commented:

“Recessionary fears kept investors on edge in February, leading them to flock to risk-off exposures and sell developed equities. The month saw records for gold-based and minimum volatility products, and US equites ETPs recorded a second consecutive month in outflows, shedding $19.5bn year-to-date. So far this year investors have shown a preference for safer haven assets with US treasuries and gold already ahead of their 2015 flows, generating a combined $24bn in the first two months.

“We did however see some episodes of higher risk sentiment in the second half of February. This bolstered flows into broad fixed income and investment grade corporate bonds, recording $2.1bn and $2.5bn respectively. Crude oil funds also brought in $1.2bn fuelled by ongoing talks around potential production cuts by OPEC and non-OPEC countries.

“Weaker macro data, lacklustre earnings in the final quarter of 2015 and ongoing concerns around Brexit, meant risk-off sentiment also gripped European ETP investors in February. Of the $2.6bn of new flows recorded in European-domiciled ETPs, we saw a turn in the tide among investors. Having been the most popular asset class in January, equities recorded net outflows for the month. Instead European investors became aligned with global markets and were more risk averse. This led to gold being the flavour of the month among European investors, recording $2.4bn in assets, followed by government bond funds.” 



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