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Lyxor ETF Money Monitor for September 2018

Rebound reinforced for European Equity ETFs….

By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst


Net new assets in the European ETF market more than doubled in September to €5.9bn from the €2.3bn we saw in August.

Equities gathered the bulk of the inflows (€5.3bn) and are up significantly (+82%) since August.

US equity ETFs again enjoyed the most significant gains (€2.5bn) but their Europe-focused counterparts confirmed their latest rebound with another strong month.

Fixed income ETF inflows rebounded despite rising rates (€1.2bn), led by US treasuries (€759m).

In contrast, commodity ETFs continued to suffer significant outflows (-€635m) on trade concerns.

Smart beta regains some popularity

Sentiment on smart beta may finally have turned. A net €1.4bn of flows entered smart beta ETFs last month – the largest inflows in two years.

In fact, smart beta equity ETF flows represented more than half of the inflows into European equity ETFs and World equity ETFs.

However, they still accounted for a very small part of US equityflows, because investing outside of the US demands more caution right now.

Minimum volatility ETFs flows, in particular into World and Europe, have regained significant ground(€281m).

Risk-based,fundamental and factor allocation strategies enjoyed significant inflows simultaneously, which is something we rarely see.

The first two enjoyed something of a rebound, while factor allocation strategies continued their recent rally.

Unlike other strategies, factor allocation inflows are diversified andsupported by Momentum, Low Vol/Low Beta and Quality factor ETFs (+€612m, +€475m and +€284m respectively in Q3).

This can be explained, at least in part, by the uncertain economic environment in Europe and the advanced phase of the economic cycle in the US.

In such a context, Quality tends to outperform Value.

Little wonder US Value ETFs suffered massive outflows in September (-€560m).

Source: ETFWorld

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