BlackRock ETP Landscape - Global ETPs fLows accelerate ahead of 2015 pace as emerging markets climb to record territory

• Broad EM equities gathered $6.2bn and EM debt funds collected $1.9bn with both categories on record year-to-date pace amid a leveling of commodity prices and a weaker U.S. dollar
• U.S. equities generated inflows of $16.6bn focused in large caps and with strong flows to dividend-weighted and preferred stock strategies as investors search for income
• Fixed income collected $11.6bn driven by investment grade corporate bonds with $5.0bn, which are also on record year-to-date pace, as investors show preference for higher-yielding categories

Global ETPs gathered $39.8bn in August bringing year-todate flows to $213.4bn, ahead of 2015’s record-setting pace. Similar to July, investors favored U.S. and emerging markets (EM) equities as well as EM and corporate debt.

Broad EM equity funds maintained momentum collecting $6.2bn, marking a third consecutive month of inflows, amid a leveling of commodity prices and a weaker U.S. dollar. The category remains on record pace with $22.9bn year-to-date. U.S. equities held course with inflows of $16.6bn including large caps with $7.3bn. Equity income-generating strategies gathered assets against the backdrop of low and negative yields globally: Dividend-weighted funds brought in $1.4bn and preferred stock funds added a monthly record $1.1bn and year-to-date gains of $5.2bn already exceed last year’s record flows. This same backdrop of low yields also benefited gold miners which saw inflows of $1.8bn.

EM debt funds saw inflows with $1.9bn in August. Year-todate flows to the category are $12.7bn surpassing the 2012 full-year flow record of $8.3bn. Investment grade corporate bond funds drew in $5.0bn in August and have been strong all year thanks to a number of tailwinds (see below). Year-to-date flows of $29.2bn are also already above last year’s record total inflows.

Finally, European equity outflows persisted in August. PanEuropean equities shed ($2.7bn) and German equities shed ($1.1bn) as earnings continued to deteriorate and inflation remains stubbornly low.

Ursula Marchioni, Chief Strategist, iShares EMEA commented: “There was no August lull in the ETP landscape, with flow volumes still going strong at $39.8bn. July and August saw a total of $95bn of inflows into global ETPs, making Q3 the strongest quarter of the year so far, and that is without September’s data. ”

“Within the European ETP Landscape, flows in August meant equity ETP inflows for the year have returned to positive levels. This is a clear indicator of investors starting to become less risk averse, following recent post-Brexit market volatility . At the same time, investor demand for smart beta strategies continues with $3.4bn of inflows this month. Within European equities specifically, whilst broad European equity funds continue to witness large outflows, European factor funds have gathered net inflows. This divergence suggests that when investors start to reallocate back to European equities, they do so taking a precautious and selective view, rather than going into broad market exposures.”