July 2018 ETP Flows Commentary
Flows bounce back with $4.0B added in July – the largest month of inflows since February – not quite a summer lull.
Karim Chedid
Karim Chedid, CAIA
Investment Strategist
August 2018

Key themes this month

1. EU-reka: European equity ETPs have their first month of inflows in five months
2. There’s life in the EMD tree yet: Investors favour hard currency EMD
3. In need of a gold rush: Largest outflows for commodity ETPs since Dec 2016

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Unless otherwise stated all data is sourced from the BlackRock Global ETP Landscape at 31 July 2018. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy.

1. Eu-reka

  • European equity ETPs stemmed four consecutive months of outflows (where over $11B was lost) with small inflows of $0.4B last month. Inflows in July predominantly went into broad European equity ETPs.
  • The majority of equity buying in July went into US equity ETPs, in line with the trend we have seen this year, while investors continued to sell EM equity (-$1.0B).
  • EM equity ETPs have now had outflows for three consecutive months, as investors move towards perceived safer assets than EM equities – US equities for example – in the face of rising global trade tensions.

Is this the start of something nEU?

Monthly flows into EMEA listed European equity ETPs,
January-July 2018

2. There’s life in the EMD tree yet

  • Investor interest in EMD increased in July with $0.7B of inflows – the largest inflow month since January. Money overwhelmingly went into hard currency ETPs (+$0.8B), as $0.1B of outflows from local currency ETPs brought down the headline figure.
  • Inflows into EMD in July differ from the inflows in January as the flows at the beginning of the year mainly went into local currency ETPs. Investors turned on them in March, and have consistently sold local currency ETPs since then. 
  • A strengthening dollar this year has increased the appeal of hard currency EMD, and issuance pressure that weighed on interest in EMD earlier in the year looks to be behind us. 

Rock hard

Monthly flows into EMEA listed EMD ETPs, broken down by currency, January-July 2018

Fixed income: A small stutter

  • Investment grade lost $0.4B last week, in its first outflow week since mid-March. Investors had been buying IG throughout Q2 as investment opportunities appeared to present themselves at the front end of the curve. Last week’s outflows match the $0.4B in the week before.
  • Outflows from IG were predominantly from US listed funds, with the year to date inflow figure standing at $6.1B – boosted by consistent buying from April onwards.

Lacking conviction

Cumulative flows into EMEA listed gold ETPs, January-July 2018

Past  flows into EMEA-listed ETPs are not a guide to current or future flows  and should not be the sole factor of consideration when selecting a  product. This material is not intended to be relied upon as a forecast,  research or investment advice, and is not a recommendation to, offer or  solicitation to buy or sell any financial instrument or product or to  adopt any investment strategy. Investment in the products mentioned in  this document may not be suitable for all investors. BlackRock has not  considered the suitability of any product against your individual needs  and risk tolerance.

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