Blackrock Global ETP Landscape: September 2015

Global ETPs gathered $17.2bn last month – the strongest August result in five years. Main drivers were non-U.S. developed markets equity and fixed income – as concerns over flagging global growth returned and market volatility increased….

Marchioni Ursula – Head of ETP Research EMEA at iShares

Within European ETPs, European equities exposure had another successful month – the third in a row bringing June-to-August cumulative flows to $15.6bn. This suggests a recovery in the earlier momentum for the European equities theme – which was popular during Q1 but went out of investors’ favour moving in April and May.  

European ETP industry inflows surged to $3.8bn for the volatile week of 24-28th August, the strongest weekly figure since early February. Most of the activity was concentrated from Tuesday to Thursday, averaging over $1bn per day

 Ursula Marchioni, Head of ETP Research at BlackRock commented:

“With inflows of $6.7bn, European equities was the strongest category of European ETPs , and attracted the highest inflows of all regions and asset classes globally in August. This was the second highest inflow figure this year and reflects a continuation of a ‘buy-on-dip’ approach to investing in European equities.”

“Stronger inflows for three consecutive months suggest a recovery in the earlier momentum for European equities exposures. During Q1 2015, EMEA-domiciled European equity ETPs amassed cumulative flows of $19bn, supported by the ECB’s Quantitative Easing and improved prospects of macro recovery. Moving into April and May, their pace slowed down though – with net outflows $2.5bn – as renewed concerns over ‘Grexit’  dominated headlines. The cumulative flows in June-to-August account for $15.6bn, signalling a renewed investor interest and confidence in their own domestic market.

“Emerging market (EM) outflows intensified last month to ($2.1bn). This is the third consecutive month of outflows for the theme – as concerns around China gripped investor sentiment globally, leading to a remarkable loss of (21%) in the MSCI Emerging Markets Index during the month. Looking at monthly flows since the start of 2010, August 2015 was the third-worst month for EMEA-domiciled EM exposures and marginally close to the other two worst monthly outflows – December 2014 ($2.3bn) and June 2013 ($2.4bn).”

“The last week of August started on a negative note for global equities – with leading equity benchmarks losing 3-8% on Monday 24th and experiencing extremely high levels of volatility. This was followed by a relief rally kicking in later in the week, with the majority of the weekly’s flows – $3.3bn – going into developed market equities. This strong result was driven by Europe and U.S. exposures at $3.3bn and $0.8bn respectively.

Fixed income ETP flows slowed after regaining momentum over the prior two months. Investors sought safety during the volatile week in European and U.S. government bonds (inflows of $290m). Emerging market debt redemptions intensified, with ($0.7bn) over the last two weeks bringing the year to date total to ($1.2bn).”


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