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Lyxor ETF Barometer – Monthly European ETF Market Trends for December 2016

European ETF Market flows continued to recover in December 2016……

Marlène Hassine – Head of ETF Research – Lyxor ETF

Net New Assets (NNA) during this month amounted to EUR4.7bn, the highest level since September 2016. Total Assets under Management are up 14% vs. the end of 2015, reaching EUR516bn, and include a market impact of +5.0%. November’s great rotation from bonds into equities halted. While developed equity ETFs continued to gather inflows, outflows on bond ETFs stopped.

Equity indices gathered most of the market inflows at EUR4.1bn. Interest was sustained on developed equity ETFs. US equity inflows continued to be above the one year average at EUR1.2bn. December was the third highest month of the year for European equity ETFs at EUR1.7bn while Japanese ETF flows reached a one year record high at EUR486M. The Fed interest rate increase continued to trigger outflows from Emerging market equity ETFs of EUR987M. These outflows mainly concerned broad indices i.e. MSCI Emerging markets and Asian ETFs. Within Smart Beta, the value style continued to see high interest with EUR505M of inflows together with some flows on multifactor ETFs. Minimum Volatility ETFs on the other hand continued to see outflows at EUR749M in an environment that remained risk-on.

Fixed income indices’outflows stopped. December saw EUR466M of inflows compared to EUR3.3bn of outflows in November. All developed market debt ETFs rebounded. European govies ETF flows rebounded at EUR451M after 3 months of outflows totaling more than EUR2.0bn. Both investment grade and high yield corporate bond ETFs saw inflows respectively of EUR405M and EUR402M in a slightly decreasing interest rate environment in the second half of the month. Emerging debt ETFs continued to see strong outflows following the Fed interest rate increase. Inflation-linked flows stopped in December, with EUR23M of outflows in a context of decreasing inflation fears. Interestingly, short strategy ETFs saw EUR249M of outflows after a record high in November as pressure on interest rates decreased slightly.

Commodities flows* reached EUR98M with the increased oil price in December boosting flows on Broad commodity ETFs at EUR255M, while gold ETFs saw EUR157M of outflows.

* including also non UCITS eligible/compliant ETFs


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