European ETF Market flows rebounded moderately in June 2016. Net New Assets (NNA) during the month amounted to EUR3.5bn…
Marlène Hassine – Head of ETF Research – Lyxor ETF
Lyxor Etf Barometer
Year to date NNA total EUR14.1bn, compared to EUR33.8bn for the first half of 2015. Total Assets under Management are up 1% vs. the end of 2015, reaching EUR454bn, and including a limited market impact (0.78%*). US Equity, Smart Beta and European corporate bond ETFs saw significant inflows reflecting the cautiousness of investors in a still highly uncertain environment following the results of the UK referendum.
■ Equity ETFs saw positive flows at EUR2.1bn after four consecutive months of outflows. Year to date Equity ETF flows are still negative at –EUR3.3bn. After four months of outflows, European equity ETF flows rebounded at EUR639M as investors cautiously entered into equity Smart Beta products due to the high level of uncertainty on the impact of Brexit. For the first half of the year, European equity ETF flows are still negative at –EUR7.1bn. Negative economic newsflow continues to weigh on Asia equity ETFs that saw EUR425M of outflows and a total of EUR3.8bn year to date. On the other hand, US equity ETFs continued their rebound at EUR888M and a total of EUR3bn year to date. Emerging markets flows turned negative in June after four month of positive flows as investors flew from risky assets to safe havens. Broad indices continued to see inflows while single country ETFs continued to see outflows, mainly China ETFs. Smart Beta ETFs saw a record high level of inflows in June at EUR1.2bn i.e. EUR4.4bn year to date which is already above the EUR4.1bn collected throughout 2015. Both Minimum Volatility and factor allocation strategies continued to see sustained inflows respectively of EUR507M and EUR619M in an environment where investors are seeking to reduce risk. Interestingly, among the factor allocation strategies both multifactor and single factor products have attracted significant interest.
■ Fixed income ETF inflows continued to slow down at EUR1.3bn. These fixed income flows mainly concerned Investment Grade Corporate Bond ETFs at EUR1.4bn. The European IG segment continued to benefit from the support of the announced ECB asset purchases that started in June. Outflows on Developed market Government bonds have restarted at EUR848M, mainly on European govies. US govies, for their part, continued to see sustained inflows of EUR314M in a flight to quality environment. Emerging Market Govies ETF inflows continued at EUR439M, still benefiting from attractive yield pick up. Worth keeping in mind, Inflation linked ETF flows continued to see some inflows at EUR313M, mainly on US ETFs as inflation expectations are increasing overseas.
■ Commodities flows slowed down, reaching EUR169M mainly concentrated on broad Precious metals, as investors are searching for safe haven.
*75% of MSCI ACWI NTR -1.02% and 25% of the JPM Global Aggregate +6.19% between 31/12/15 and 30/06/16 in EUR.