November 2015: Blackrock Global ETP Landscape

Highlights from October’s ETP flows data: Global ETPs gathered $36.2bn during last month. The industry remains on track for a new annual record with $271bn year-to-date, versus $239bn for year-to-date 2014, indicating a strong uptake of ETPs as a

Marchioni Ursula – Head of ETP Research EMEA at iShares

preferred investment vehicles by investors globally. Flows in October were mostly driven by the U.S. Fed’s September rate decision. The risk-on sentiment that followed saw U.S. equities attracting the highest inflows at $10.3bn, followed by high yield and investment grade corporate debt at $6.1bn and $4.4bn respectively.

·         Global  fixed income ETP assets under management surpassed $500bn for the first time, underscoring the growth of fixed income ETPs and increased usage by investors. The asset class saw another month of strong inflows, gathering $14.7bn globally and driving the year-to-date flows (+$88bn) for the category above the full-year record 2014 total (+$85.8bn).

·         At $7.3bn, European-domiciled ETPs registered strong inflows for the month, taking the cumulative year-to-date flows to an all-time record high of $69bn. The previous highest full-year inflow was $62bn, recorded in 2014. Total assets under management for European ETPs now stand at a record $516.3bn. During October, fixed income flows outpaced equities amidst strong demand for both sovereign and corporate bond exposures. In equities, broad emerging markets formed the largest category (+$1.1bn), followed by European equity exposures (+$623mn). In contrast with the global ETP flows, U.S. equity exposures in Europe saw outflows.

Ursula Marchioni, Chief Strategist EMEA, iShares commented:  October flows into global ETPs were driven by the Fed’s decision to hold rates in September, triggering a risk-on environment in global markets. This dovish stance at the September FOMC and missed U.S. non-farm payroll numbers on October 2, meant that bad news became good news for markets once again. As a result, global fixed income ETPs recorded strong inflows across investment grade and high yield – with some of these flows coming at the expense of U.S. government bond fund outflows (-$747mn). Equities inflows into U.S. exposures gathered pace, accumulating $10.3bn on the back of a strong demand from domestic investors. October also saw emerging market equity exposures back in favour with the longest streak of weekly inflows all year (4 consecutive weeks), supported by a stabilisation in Chinese data, albeit at low levels.
The picture in Europe was aligned with the global one, with a few exceptions. October flows in European ETPs were driven by fixed income (+$3.7bn), which outpaced equities (+$3.3bn). European ETPs saw strong demand for risk-on fixed income credit exposures (investment grade and high yield exposures, attracting $1.12bn and $832mn respectively). This was a result of ECB-driven trickle down yield demand and, unlike the global trend, did not happen at the expense of government bond exposures, which saw strong demand as well (+$1.17bn). U.S. equity exposures saw outflows totalling $283mn, as investors focussed more on their domestic European exposures and on emerging equities.


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