European ETF market flows were remained steady in July. Net New Assets (NNA) over the month totalled EUR8.7bn……
Marlène Hassine – Head of ETF Research – Lyxor ETF
Total ETF Assets under Management are up 13% vs. the end of 2016, reaching EUR583bn and including a positive market impact of 2%. Assets in emerging market and fixed income ETFs shrank significantly as investors awakened to a potentially hawkish Fed and ECB.
Equity ETFs inflows reached EUR5.5bn. As the eurozone continued to enjoy strong economic growth, European equity ETF inflows saw their second highest month of inflows year to date of EUR3.4bn, representing two thirds of overall equity inflows. US equity ETF inflows continued to recover reaching EUR774M, helped by the weakening USD and a strong earnings season, in particular in the tech sector. Flows into Asia Pacific equity ETFs slowed down to EUR301M as PM Abe and Japan’s Abenomics were challenged. Global ETF inflows continued to decelerate, to EUR253M as global monetary normalisation took centre stage and unsettled markets. This also negatively impacted emerging market equity ETF flows, reduced to EUR306M, their lowest level in 6 months. Once again, these flows were almost exclusively focused on broad-based ETFs, rather than single countries. Smart Beta ETF inflows amounted to EUR253M, in line with the one year average. Flows were mainly focused on factor allocation strategies, namely multifactor ETFs and value ETFs.
Fixed income ETF inflows decreased to EUR2.3bn, close to the lowest monthly level of the year reached in April. Both developed and emerging markets govies were negatively impacted by the more hawkish environment in the US and in Europe and the threat of rising rates. Developed govies saw EUR427M of outflows while emerging market debt inflows decreased to EUR612M after a year of monthly inflows close to or above EUR1bn. On the positive side, both corporate bond and money market ETFs kept seeing inflows respectively at EUR1bn and EUR731M, mainly dedicated to floating rate note and short term ETFs in a rising rate environment. Normalisation expectations increased inflation-linked ETF flows with EUR334M of NNA.
Commodities flows surged at EUR748M, hitting a one-year record high, and were mainly focused on precious metal commodity ETFs.