Global ETP Flows June 2020

Natasha Sarkaria
Investment Strategist

Key themes in June:

  1. Fixed income takes the credit: Record inflows for IG and inflation linkers
  2. Time to return to EU?: Overseas buying of European equities drives inflows
  3. The value factor: Value inflows pick back up

Unless otherwise stated all data is sourced from the BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 30 June 2020. All amounts given in USD.

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Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

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1. Fixed income takes the credit

  • June’s record buying in fixed income is attributable to the highest inflow month for IG ETPs since records began. Inflows of $21.6B beat the record set in April by $8.3B, taking total IG inflows in Q2 to $47.1B – a record in its own right. This is particularly remarkable as it follows a fairly flat Q1, where flows netted out at -$0.2B. Q2 flows into IG beat the previous record, set in Q1 2019, by $22.7B. Delving deeper, inflows overwhelmingly went towards US focused IG, with buying in eurozone focused ETPs dropping off after a pick up in April and May.
  • Buying in inflation linkers also significantly picked up in June with $4.4B of inflows. This record monthly buying for the exposure beat the previous record of $2.5B set in November 2016, the month of the last US presidential election. We’ve seen interest in linkers start to pick up since mid-April, following record outflows from the exposure in March (-$4.6B), as investors take into account the potential inflationary pressures of the ongoing pandemic. While buying in linkers has largely been focused in US listed products, EMEA-listed buying also picked up to $1.2B in June.

2020 smashes records

Monthly flows into IG ETPs, January 2016-June 2020

Monthly flows into IG ETPs, January 2016-June 2020

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 30 June 2020.

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2. Time to return to EU?

  • Inflows into European equities returned with a bang in June, with $3.7B added. June marked the largest inflow month for the exposure since November 2019, and the largest for US listed European equities – which accounted for $3.5B of the total $3.7B – since June 2017.
  • US investors in European equities doubled down on the exposure into the start of June with three consecutive weeks of inflows into US-listed products. In EMEA, conviction has been a little more mixed, with flows only turning positive again in the last two weeks of the month.
  • EM continued its poor flow run with a further $4.9B of outflows in June, although outflows slowed from $9.4B the month before. The headline outflows mask tentative buying (+$0.8B) into US-listed EM in the second half of the month. The headline outflows also hide the interest in broad EM equity (+$1.1B), which was more than offset by outflows from single country ETPs (-$6.2B).

Overseas buying

Cumulative flows into European equity ETPs, split by listing region, January-June 2020

Cumulative flows into European equity ETPs, split by listing region, January-June 2020

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 30 June 2020.

3. The value factor

  • After a flat inflow month in May, value flows picked up to $1.6B in June, the largest monthly inflows since November 2019. Buying in value started off 2020 in negative territory, as investors expressed a preference for quality and min vol, before turning positive in April post-market volatility.
  • Investors in EMEA-listed value ETPs bought in June for the first time this year. Inflows were fairly well-split between EMEA and US-listed ETPs, with US-listed ETPs taking approximately 2/3 of the flows – in contrast to April’s value inflows, which were driven by buying in exclusively US-listed products.
  • In contrast, minimum volatility is now on a four month outflow streak despite elevated market volatility over this period, with a further $1.3B out in June. Quality flows are flat on the month, following $1.1B added in May.

Playing catch up

Cumulative flows into selected factor ETPs, January-June 2020

Playing catchCumulative flows into selected factor ETPs, January-June 2020

Source: BlackRock Global ETP Landscape (a BlackRock tool that sources data from BlackRock and Markit) at 30 June 2020.

Past flows into global 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.