European ETF Market flows reached a two-year record high in January 2017…..
Marlène Hassine – Head of ETF Research – Lyxor ETF
Net New Assets (NNA) during this month amounted to EUR10.8bn, very close to the previous record high reached in January 2015 of EUR10.9bn. Total Assets under Management are up 2% vs. the end of 2016, reaching EUR525bn, despite a negative market impact of -0.31%. Developed equity, emerging debt & corporate bond ETFs have seen high inflows in a more risk-on environment.
Equity ETFs recorded strong inflows at EUR7.2bn. Investors favoured developed equity ETFs in a more favorable economic environment. Both US and European ETFs benefited from this improved situation with EUR2.5bn each of NNA. Inflows have also been significant in global ETFs reflecting this increased optimism. Emerging markets ETFs flows on the other hand have been negative at -EUR217M. Interestingly, emerging markets ETFs on broad indices saw outflows whereas flows on emerging country ETFs registered a one year record high at EUR238M, split between Russia, Turkey and Brazil. Smart Beta ETFs saw significant inflows at EUR790M. Value ETFs continued to benefit from the rotation towards more cyclical strategies with EUR531M of inflows. Flows into income generation strategies also remained at a high level in an ongoing low yield environment.
Fixed income ETF inflows reached a 6-month record high at EUR3.0bn.
Interestingly, these fixed income flows mainly concerned Emerging debt and corporate bond ETFs, while European govies saw no inflows. Flows on emerging debt reversed and were once again positive at EUR1.2bn as the search for yield continued. This also fueled a 10-month record high into high yield ETFs with inflows at EUR776M. In an improving economic environment, flows into inflationlinked ETFs remained high at EUR323M. Furthermore, short bond strategy ETF flows jumped back into positive territory at EUR169M as European interest rates increased.
Commodities ETF flows* reached a 6-month record high at EUR670M with significant flows on broad exposures.
* including also non UCITS eligible/compliant ETFs.