ETP FLOWS
April 2018 ETP Flows Commentary
Monthly net flow into EMEA-listed ETPs numbers $1.4B,
with commodities leading the way
Karim Chedid
Karim Chedid, CAIA
Investment Strategist
May 2018

Key themes this month

1. Gold standard: Commodities inflows hit $1.7B
2. It’s not US, it’s EU: Largest month of selling in European equity in over three years
3. Rising interest in rates: Rates ETPs remain the most popular in fixed income

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 30 April 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.

Gold
1. Gold standard

  • Flows into commodity ETPs led the inflows in April, with $1.7B added over the course of the month, the highest level of buying since February 2017.
  • The majority of flows went into gold where $1B of assets were gathered. Ongoing trade tensions and mixed equity market sentiment led to a spike in gold inflows, which reached the highest level since August 2016. Geopolitical events also drove a flight to safe haven assets in 2016.
  • Broad commodity ETPs continued to be in demand, gathering $686m in April. Money has been going into EMEA-listed broad commodity ETPs each month this year, which has been supported by the uptick in the commodity price and continuously strong global growth.

Commodities in vogue

Monthly flows into EMEA-listed gold and
broad commodity ETPs, January 2017-April 2018

EU
2. It’s not US, its EU

  • EMEA-listed equity ETPs lost $1.9B in April, with the outflows mainly coming from European equity ETPs, which lost $4.3B. This is the largest month of selling in European equities since September 2014.
  • European equity ETPs have been increasingly unpopular since March, when $2.4B flowed out. A wave of mixed eurozone macro data, combined with stronger earnings expectations for the US relative to Europe, appear to have reduced investor confidence in European equities.
  • US equities, on the other hand, have had inflows for 12 consecutive months, for the first time since 2014. Strong earnings expectations, as well as consistently robust macroeconomic data – which have both been boosted by US fiscal stimulus – have made the region attractive in 2018.

The divergence

Cumulative flows into EMEA-listed European
equity and US equity ETPs, January 2018-April 2018

Interest
3. Rising interest in rates

  • Fixed income flows returned to positive territory in April, as $1.5B flowed into EMEA-listed ETPs. Emerging market debt and investment grade ETPs continued to be unpopular, with outflows totalling  $475m.
  • Government bond ETPs remained the most popular within fixed income for a third consecutive month, gathering $1.5B of inflows.
  • Within rates, money once again went towards short duration ETPs (+$539m). The short end of the curve looks appealing to investors given the opportunity to get yield above inflation levels and, at the same time, hide in safe havens amidst jittery market sentiment. 

G-rate

Cumulative flows into EMEA-listed rates ETPs,
January 2017-April 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.