Hassine Marlene Lyxor ETF Money Monitor

Lyxor ETF Money Monitor – April 2019

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….

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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.

Source: ETFWorld

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