ETFs enjoy their best ever start to a year…
By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst
Having already broken many records in 2017, European ETF Market flows smashed the record for any January by 23%. It was, therefore, the best start to a year ETFs have ever had. Net New Assets (NNA) tripled to €13.4bn from €4.2bn in December. Equities attracted most of the inflows, and enjoyed their best ever month (€11.5bn vs. €7.9bn).
Among the equity markets, US equity inflows slowed to €1.7bn vs. €2.6bn in December 2017, but the real story lay elsewhere. Japan equities enjoyed inflows of €1.2bn – an all-time high for any month. Flows surged into European Equities (€3.7bn vs. -€532m the previous month). Global equity inflows also hit new monthly highs at €2.2bn.
Appetite for fixed income lingered but was more muted. Flows in fact halved to €1.4bn from where they were the January before. There were outflows from developed market government bonds (-€236m vs. €290m), most obviously from Europe (-€485m). In contrast, emerging market government bond flows rebounded strongly to €896m from -€68m the month before.
One key trend was evident however in the growing appeal of inflation ETFs. In this narrower segment, we saw the fourth successive monthly acceleration of inflows, this time to €645m. All of that was driven by a significant rise in inflation expectations in the US. Consequently, all flows in this category went into US inflation ETFs while their European counterparts suffered outflows of €152m. Away from bonds, commodity (€476m) and Smart Beta ETFs (€892m) also enjoyed very positive months.