ETP Landscape: Highlights from November’s ETP flows data

Marchioni UrsulaGlobal ETPs gathered $28.2bn in November.  2015 YTD flows now stand at $302.4bn – in sight of the highest-ever full-year flows of $345.4bn registered in 2014.  

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Ursula Marchioni, Chief Strategist EMEA, iShares

· U.S. equity funds had their best month this year, collecting $21.4bn, while broad developed markets equity funds attracted $6.4 bn.  Emerging markets equity funds shed ($2.5bn) overall, concentrated in China country funds with ($2.0bn) of outflows.

· After a strong October, fixed income flows reversed course with net outflows of ($129mn), with U.S. Treasury funds losing ($4.5bn) in light of a possible December rate rise.

· European ETPs continued their forward momentum during November, accumulating $3.2bn in net new flows.  2015 has been the best year on record for the European ETP industry already, with $73.2bn of inflows so far. 

· Much in line with the global picture, equity funds in Europe gathered $2.9bn, led by U.S. (+$0.9bn) and broad developed markets equity exposures (+$1.05bn).  While Eurozone equities saw the lion’s share of developed markets equity flows this year, flows in November were flat.

· Fixed income fund flows slowed to $64.2mn.  Corporate bond funds attracted $1.9bn, while money market funds lost ($0.5bn) and sovereign bond funds shed ($1.3bn).  Within corporate bond exposures, investment grade and high yield bond funds continued to attract investors, accumulating $0.9bn and $1.0bn respectively.

Ursula Marchioni, Chief Strategist EMEA, iShares commented: “Global ETP flows remain on a record path for 2015. In November, flows were mostly driven – once again – by central banks’ diverging policies.  As the month progressed, the US Federal Reserve looked increasingly likely to lift rates at their December meeting, and markets expected the European Central Bank to add to their stimulus program.  As a result, we saw strong flows into U.S. and developed equity funds, while U.S. treasuries were out of favour.  After the rebound in October, the slowdown in China last month weighed again on emerging markets equities, which were equally not helped by the prospects of the nearing Fed decision. November also saw increasing demand for energy-based commodity funds.  Speculation around potential cuts in oil production from large OPEC members could continue to drive flows in this space in the next months.

“ETP flows in Europe are at a historical high, driven in November by equity funds, while fixed income flows were nearly flat.  While Eurozone equities saw the lion’s share of developed markets flows this year, last month investors turned to opportunities in other markets rather than to the consensus home bias.  We believe this could well change with earnings for the region continuing to deliver, and market sentiment continues to rely on the ECB easing stance.  In fixed income, we have seen investors flock into credit. Further ECB sovereign bond buying will continue to push investors incrementally down the risk spectrum, out of traditional bond exposures into corporate bonds.”


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