Lyxor ETF Money Monitor: Net new assets in the European ETF market slowed to €3.7bn in April from the €5.2bn we saw in March….
By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst
Net new assets in the European ETF market slowed to €3.7bn in April from the €5.2bn we saw in March.
Equity outflows continued (-€2.2bn after -€1.7bn the month before) driven by massive outflows from developed market equities (-€3.4bn). Emerging markets equities, for their part, recorded a significant rebound (€1.3bn from €0.4bn).
Fixed income ETFs enjoyed huge inflows (€4.1bn) for a fifth consecutive month driven by developed corporate bonds and high yield bonds.
Flows into commodity ETFs were virtually flat.Smart Beta ETFs flows resumed their positive trend with €1.3bn of inflows, once again mostly on the quality factor.
ESG ETFs flows were very similar to those we saw in March (€477m vs. €406m) with every one of the ESG categories still positive.
Focus: Sentiment reverses for Eurozone equities
Monthly outflows from eurozone equities continued in April, with outflows of €2.5bn matching those we saw in March. The year-to-date total now stands at -€6.9bn.
Since March last year, the outflows amount to €17bn. Eurozone manufacturing PMI has lost 7 points over the same period (dropping from 55.2 to 47.9).
However, PMIs enjoyed a slight rebound in April for the first time since June 2018. Investor sentiment – still stubbornly against Europe – may change should this continue.
Overall, stabilising PMIs, stronger-than-expected Q1 GDP growth, the pro-European stance in Spain following the latest election and the recovery we expect to see in H2 should sustain eurozone equities.
Our research shows that there has, historically, been a significant correlation between eurozone equity ETF flows and eurozone manufacturing PMI.
Therefore, should the PMI rebound further, this could lead to a trend reversal in Eurozone equity flows. The graph below shows what could happen.