July 2019 ETP flow trends

Natasha Sarkaria
Natasha Sarkaria
Investment Strategist

Key themes this month

1. A silver lining: Largest flows into silver since 2014
2. Evenly spread: Inflows into fixed income across the board
3. Europe buying picked up: $1.4B into European equity

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. You may not get back the amount originally invested.

Unless otherwise stated all data is sourced from the BlackRock Global ETP Landscape at 31 July 2019. All amounts given in USD.

Gold
1. A silver lining

  • While gold inflows dropped to $0.6B in July – just 30% of June’s bumper $2.5B – silver flows picked up to $0.5B. This marks the largest monthly inflow into silver since May 2014.
  • Gold flows picked up into the end of the month, with the headline figure weighed down by flat flows at the front end. On the whole, investors have bought gold consistently since the end of April, given increased market volatility and macro uncertainty, specifically with regards to trade.
  • More broadly, July was the third consecutive month of inflows into commodity ETPs, with $1.7B added. Despite outflows in March and April earlier in the year, investors have been more positive on commodities this year, with YTD flows now standing at $4.7B vs. -$0.7B across the whole of 2018. 

Medal rush

Cumulative flows into EMEA-listed gold and silver ETPs, January-July 2019

Cumulative flows into EMEA-listed gold and silver ETPs, January-July 2019

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 31 July 2019.

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Scales
2. Evenly spread

  • Flows into fixed income last month were spread across the board, with emerging market debt (EMD), IG, HY and rates all gathering between $1.5-$1.9B. This is a marked change from June, when IG drove inflows with $3.6B added (comprising more than half of the $6.5B of inflows into all fixed income in June).
  • EMD flows (+$1.7B) rose to the highest monthly level since March, when $1.9B was added. In July, 65% of flows into EMD went into hard currency ETPs. This marked a departure from the trends we saw in Q1, when investors favoured local currency (LC) over hard currency (HC) ETPs.
  • The preference for HC has become more prevalent over the past three months with investors either selling less of the exposure (when flows are negative), or buying considerably more HC. 

Shifting trends

Monthly flows into EMEA-listed EMD ETPs, January-July 2019

Monthly flows into EMEA-listed EMD ETPs, January-July 2019

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 31 July 2019.

Europe
3. Europe buying picked up

  • European equity ETPs registered the largest monthly inflow since February 2018, with $1.4B added in July. Inflows were across European equity exposures, with a slight tilt towards eurozone/ex-UK ETPs, in light of the ongoing Brexit uncertainty.
  • July is only the second month this year that investors have added to European equity ETPs, with February’s $0.1B of inflows the only other month of positive flows. Between March and June, investors sold $8.3B of the exposure, meaning that the YTD flow figure is still negative, at -$8.8B. 
  • EM equity flows also picked up in July, to $0.9B, following lacklustre flows in May and June which left net flows at -$0.1B over the two months. Investors are still adding to EM equity it appears, but with less intensity than the first four months of the year, when  just over $8B was added. 

A positive turn

Monthly flows into EMEA-listed European equity ETPs, January 2018-July 2019

Monthly flows into EMEA-listed European equity ETPs, January 2016-July 2019

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 31 July 2019.

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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