Blackrock Global ETP Landscape: October 2015

Highlights from September’s ETP flows data:  Global ETPs gathered $28bn last month taking the cumulative flows for 2015 to $230bn. The industry remains on track for a record year….

Marchioni Ursula – Head of ETP Research EMEA at iShares

  • September flows were driven, globally, by U.S. equities – with flows five times higher than in August – and Japan equities, as well as U.S. treasuries. Broad European equities exposure continued to attract flows, although at a slower pace than previous months.
  • In Europe, ETP flows slowed their momentum, gathering $2bn for the month – their slowest pace of the year so far.  The majority of inflows went into European broad equities, which slowed down to $1.7bn inflows compared with $4.6bn inflows in August. This low flow figure didn’t impact the broad picture for the year, though – as cumulative flows for 2015 stands at $60bn, the highest September year to date figure since 2008.

Sven Württemberger, Head iShares German-speaking Switzerland, commented:

“The decision by the FED to leave interest rates unchanged had an almost immediate effect on passive ETF investments, where creations went soaring especially in Fixed Income investment grade – including CH Corporate Bonds and selectively also in high yield where Swiss wealth managers returned to have a more favourable opinion. Sovereign bonds exposure seemed to split investors, with slightly more sellers than buyers being in the market, despite some institutional investors buying longer maturity Swiss government exposure as a risk off measurement. Equity followed the path of the summer, by focusing on European Developed markets being the strongest singular trend in September – even Emerging markets witnessed a more positive trend after being absent for the last quarter.”

Ursula Marchioni, Chief Strategist EMEA, iShares commented:

“When comparing September ETP flows for the global and European industries, we find momentum healthily continued at global level, while European investors remained on the side lines. In our view, the main reason for such diverging flow results lies in the Fed decision to delay hiking rates in the September FOMC meeting. This decision drove US investors into their domestic equity market, which did not happen in Europe as the ECB remains at a very different stage.”

“Outflows from emerging equities (EM) seem to have abated last month. We have also detected a pick-up in interest for minimum volatility strategies focussed on EM – which could represent an early sign of clients wishing to re-gain exposure to the theme, with some downside protection. Q3 outflows for the category remain significant, and while it might be too early to call the bottom of the market for EM, it is an area to watch. The “data so bad, it’s positive again” behaviour we observed on Friday 2 Oct post the non-farm payrolls release means that the expectations for a Fed hike are being delayed – and this could create a tactically positive environment for EM.”


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