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European ETF Market flows reached a 2016 record high in July

Net New Assets (NNA) during this month amounted to EUR8.2bn, more than twice the year to date monthly average level. Total Assets under Management are up 5% vs. the end of 2015, reaching EUR474bn, and including a limited market impact...

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Net New Assets (NNA) during this month amounted to EUR8.2bn, more than twice the year to date monthly average level. Total Assets under Management are up 5% vs. the end of 2015, reaching EUR474bn, and including a limited market impact (+3.5% [1]). Higher yielding and Smart Beta ETFs gathered most of the inflows in an uncertain environment.

  • Equity indices saw record high inflows for the year at EUR2.2bn. On developed markets, flows were limited at EUR598M. These figures highlight a heterogeneous situation. Helped by the Fed’s still dovish tone and a good earnings season, US flows were significant at EUR2.0bn. On the other hand, uncertainties following the Brexit vote continued to weigh of European equities that saw EUR2.9bn of outflows. After two month of weakness, Emerging equities confirmed their rebound with inflows of EUR1.5bn mainly on broad indices, thus indicating tactical moves from investors as the Fed continues to delay rate hikes. Strong momentum on Smart Beta ETFs continued with a one year record high reached in July at EUR1.8bn, mainly focused on Minimum Volatility and dividend products.
  • Fixed income inflows rebounded strongly at EUR4.9bn. Close to the one year record high observed in March 2016 of EUR5.7bn. On developed countries, flows were mainly focused on Investment Grade Corporate Bond ETFs at EUR1.9bn, still sustained by ECB action. Emerging Market Debt saw record high inflows at EUR2bn, benefiting from investors’ hunt for yield in a very low/zero interest rate environment. Yield scarcity also explains the rebound of flows into High yield Bond ETFs at EUR660M after two months of outflows. Interestingly, flows on inflation linked ETFs saw a one year record low with outflows of EUR120M.
  • Commodities flows have reached a one-year record high at EUR1.1bn mainly focused on broad indices , sustained by renewed interest from investors on the asset class.

Lyxor Research , August 8

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Footnotes

[1] 75% of MSCI ACWI NTR +2.58% and 25% of the JPM Global Aggregate +6.25% between 31/12/15 and 29/07/16 in EUR.

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