GLOBAL ETP FLOWS: JANUARY 2020


Natasha Sarkaria 01/Feb/2020

Key themes in January:

1.Buying broad: broad developed market (DM) equity flows increase
2.Coming off highs: high yield (HY) flows fall to $0.2B
3.A golden start: gold flows increase tenfold

Insights from iShares by BlackRock, the world’s leading Exchange Traded Fund (ETF) provider.* About iShares > Unless otherwise stated all data is sourced from BlackRock as at 16 June 2020. All amounts given in USD.

*World’s leading ETF provider: Based on over 900+ ETPs and more than USD $2 trillion in AUM globally, BlackRock Global Business Intelligence as at 30 June 2019. Trusted to manage more money than any other investment firm: Based on USD $6.84 trillion in AUM globally, BlackRock as of 30 June 2019.

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1. Buying broad

  • Inflows into equity ETPs, while remaining positive, reduced across most exposures in January. Buying in US equities fell by around 60%, to $14.0B, while EM equity flows dropped from $17.1b in December to $5.5B.
  • Broad DM equity ETP flows were an exception, remaining steady for the third consecutive month at $13.4B. Flows into Japanese equity ETPs increased significantly from $0.8B in December to $4.6B in January – although most of this went into APAC-listed funds and can be attributed to c.$4B of buying by the Bank of Japan. Inflows into EMEA-listed Japanese equity ETPs fell to just $0.2B, while outflows from US-listed Japanese equity ETPs increased to -$0.6B.
  • The UK wasn’t alone in leaving the European Union in January, as investors sold eurozone and German equities, contributing to the first outflow month for European equities since August (-$1B). Flows displayed a domestic selling bias, with EMEA-listed European equity ETPs registering outflows while US-listed counterparts gained inflows of $0.3B.

Broad DM leads the way

Cumulative flows into equity ETPs, December 2019-January 2020

Graph showing cumulative flows into equity ETPs, December 2019 to January 2020

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 31 January 2020.

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VISIT VISIT

2. Coming off highs

  • Buying in fixed income was quite varied in January, with multisector ETPs – those tracking broad bond indices that span across ratings – proving most popular, with $8.9B of inflows. Emerging market debt (EMD) and investment grade (IG) flows also picked up, helping to offset a drop in interest in HY – where inflows fell from $2.9B in December to just $0.2B in January.
  • Reduced interest in HY in January comes after a bumper 2019 for the exposure; HY registered inflows in each quarter last year for the first time (a record $25.5B was added overall). Inflows into European HY and DM HY on the whole last month offset outflows from US HY.
  • IG flows, on the other hand, have been fairly consistent since January 2019, with only one outflow month over this period, in August 2019. Inflows of $4B in January went predominantly into US-focused IG, while money was also added to eurozone and global exposures. UK IG lost $0.2B – the third outflow month for the exposure in the past four.

Multisector on top

Cumulative flows into fixed income ETPs, December 2019-January 2020

Graph showing cumulative flows into fixed income ETPs, December 2019 to January 2020

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 31 January 2020.

3. A golden start

  • Silver registered its first inflow month in five with $52m of inflows in January, as increased market volatility led investors back to precious metals.
  • Gold flows increased tenfold to $3.1B from $0.3B in December, which came after outflows of $1.4B in November. Flows were tilted into EMEA-listed gold ETPs, which gathered $1.7B, leading US-listed flows for a second consecutive month – US gold ETPs gained $1.4B in January, following flat flows in December.
  • Crude oil ETP flows also jumped back into positive territory with $0.9B of inflows in January, following two months of outflows. January’s flows were also the highest monthly inflow since November 2018. Investors didn’t really warm to the commodity last year, with $2.4B of outflows, $1.2B of which came in November and December.

Gold star-t to the year

Monthly flows into gold ETPs, January 2019-January 2020

Graph showing monthly flows into gold ETPs, January 2019 to January 2020

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 31 January 2020.

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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