ETF flows slow again in an uncertain environment

Transcription

1 1 Informed Investor: Money Monitor October By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst ETF flows slow again in an uncertain environment Net new assets in the European ETF market dropped to 1.1bn in October 4.8bn less than what we saw in September given widespread political uncertainty and a lack of any obvious market trends. Equity inflows slowed to just 386m, after another strong month for US equities ( 2.2bn) and further signs of renewed interest in European equities ( 1.7bn) were offset by a terrible month for global equities (- 3.4bn). Fixed income ETF inflows halved in the rising rate environment ( 71m), with investment-grade corporate bonds slumping to their worst month ever (- 1.3bn). What happened last month? ETF flows dropped to 1.1bn from 5.9bn YTD flows now stand at 39bn 1.1bn Equity inflows collapse Fixed income flows halve 386m 71m Little interest in Commodities - 3m Interest in smart beta fizzles out 381m Source: Monthly data in EURM from 1/1/ to 31/1/ Bloomberg, Lyxor. Note: This report is based on the data available on 1/7/. Asset and flow data may be slightly adjusted as additional data becomes available. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

2 2 What were the major trends? Equity inflows collapse 386m Monthly net inflows on European Equity ETFs 3,684 Developed Japan equities record their first positive month since February Europe equity flows still following a positive trend Worst month ever for global equities 2,196 of wh. US 555 of wh. World US equities attracted most of the inflows 141 of wh. Asia Pacific 893 of wh. Europe 131 Emerging -3,429 Global Fixed income flows halve 71m Monthly net inflows on European Fixed Income ETFs US treasury flows slow slightly Worst month ever for investment-grade corporate bonds (- 1.1bn from Eurozone) 1,92 Developed 495 of wh. Europe 366 High Yield -321 Inflation Linked 568 of wh. US 136 Emerging -1,255 Coprporate Bonds 421 Money Europe government bond flows rebound High yield bond inflows halve Inflationlinked bonds suffered more outflows Source: Monthly data in EURM from 1/1/ to 31/1/, Bloomberg, Lyxor. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

3 3 Special focus Is sentiment on Japan finally turning? Sentiment on Japan equity ETF flows may be turning. Monthly outflows have ceased for the first time since February. There are even some small inflows of 22m. This could be seen as the start of a turnaround given improving PMI results (see graph below) and a better overall environment for equities. And, while the country s economy is unlikely to do anything other than move in line with moderating global growth, the corporate sector remains healthy. Cheap valuations and Positive flows 22m undemanding earnings expectations for next year should support and sustain a recovery in equity prices after the sell-off, especially if JPY weakens further. As for the choice of investment vehicle, ETF flows may be supported by the more favourable environment for passive as correlations are currently high and sector dispersion is low. Year-to-date, only 3% of active Japan equity managers have beaten their benchmark. Japan equity ETFs monthly flows vs. Japan Manufacturing PMI 1,5 Japan equity flows Manufacturing PMI 55 1, , 51-1, Japan equity ETF yearly cumulated flows 5, , 3, 2, 1, -1, -2, -3, -4, -5, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Monthly data from 31/12/214 to 31/1/, Bloomberg, Lyxor Cross Asset Research, Lyxor ETF. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

4 4 What does it all mean? A moderate successful year so far - 6bn above 216 ETFs on the rise 39bn Total AUM is up 3.6% since 666bn YTD net Inflows on European ETFs by asset class Still a decent year for Equity ETFs Total 28,986 Developed 24,765 Fixed income ETFs lagging far behind of wh. US 19,462 of wh. World 5,926 Emerging 2,867 Global 1,354 Total Fixed Income 9,31 Developed 6,828 of wh. Europe of wh.us 3,839 Emerging 2,3 8 1,449 Inflation Linked Bad year for Commodity ETFs 723 Money 269 Commodities -83 of wh. Asia Pacific -75 of wh. Europe Discover more -1,495 Corporate bonds -348 High Yield Find out whether the money is going to the right place with our Manager Monitor Read more Check out our key investment calls with the Latest from Lyxor Read more Check out the most relevant big investment idea Read more Explore our online analytics tools Source: Monthly data in EURM from 1/1/ to 31/1/, Bloomberg, Lyxor. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

5 Appendix: The month in numbers European ETFs in October Net Inflows (EURm) NNA plunged to 1.1bn from 5.9bn in September Monthly NNA on European ETFs Total Still a decent year for European ETFs Cumulated monthly NNA on European ETFs 5 Fev- 1,88 1, , ,331 2,296 4,258 4,212 5,946 7,871 1,45 13,575 2, 4, 6, 8, 1, 12, 14, 16, 9, 8, 7, 6, 5, 4, 3, 2, 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equity Still a good year for equity ETFs ( 29bn YTD) Cumulated monthly NNA on equity ETFs Equity Emerging Moderate inflows YTD for emerging markets equity ETFs Cumulated monthly NNA on emerging market equity ETFs 7, , 5, 4, 3, 2, 1, 1, 8, 6, 4, 2, -2, , Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -4, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Fixed income Fixed income ETFs still lagging far behind ( 9.3bn) Cumulated monthly NNA on fixed income ETFs Commodities Bad year for commodity ETFs Cumulated monthly NNA on commodity ETFs 3, , , 3, 2,5 2, 2, 15, 1,5 1, 1, 5 5, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Monthly data in EURM from 1/1/215 to 31/1/, Bloomberg, Lyxor. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

6 6 Overview by asset class Equity Equity inflows collapsed Monthly NNA on equity ETFs 14, 12, 1, 8, 6, 4, 2, Developed market equities still outdo EM peers Monthly NNA on developed vs. emerging markets equity ETFs 1, Developed Emerging 8, 6, 4, 2, -2, -2, -4, Fixed Income Moderate inflows for Fixed Income ETFs ( 71m) Monthly NNA on fixed income ETFs DM bonds outdo EM peers again Monthly NNA on developed vs. emerging markets fixed income ETFs 3,5 3, 2,5 2, 1,5 1, 5 3, Developed Emerging 2,5 2, 1,5 1, , -1, Commodities Outflows from commodity ETFs cease, for now Monthly NNA on commodity ETFs Virtually flat month for both commodity categories Monthly NNA on broad & precious metals ETFs 8 1, Broad Commodities Precious Metals , , Source: Monthly data in EURM from 1/11/ to 31/1/, Bloomberg, Lyxor. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

7 7 European Fifth consecutive positive month for European Equity ETFs Monthly NNA on European equity ETFs Weak inflows for German equity ETFs Monthly NNA on German equity ETFs 5, 4, 1,5 3, 1, 2, 1, 5-1, -2, -5-3, -4, -1, -5, -1,5 Eleventh negative month in a row for Spanish and Italian equities Monthly NNA on peripheral Europe equity ETFs Flows on developed Europe equities rebound significantly Monthly NNA on developed Europe region equity ETFs 2 3, , 1, -1, -2, -5-3, Eurozone equity inflows accelerate Monthly NNA on Eurozone equity ETFs 4, Further outflows from financials Europe equity ETFs Monthly NNA on financials Europe equity ETFs 1, 8 2, , , -6 Source: Monthly data in EURM from 1/11/ to 31/1/, Bloomberg, Lyxor. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

8 8 (cont d) US & Japan equities Positive trend continues for US equity ETFs Monthly NNA on US equity ETFs 3, 2,5 2, 1,5 1, 5 Flows on Japan equity ETFs turned positive Monthly NNA on Japan equity ETFs 1,5 1, , -1,5-2, Emerging market equities Flows on emerging market equity ETFs remain positive Monthly NNA on emerging market equity ETFs 2, 1,5 1, , -1,5 Weak inflows for broad EM equity ETFs Monthly NNA on broad EM equity ETFs 1,5 1, , -2, -1,5 Smart Beta / Value Inflows on smart beta ETFs fall sharply Monthly NNA on smart beta ETFs 1,5 1, 5-5 Significant rebound for value style equity ETFs Monthly NNA on value style equity ETFs , -1, Source: Monthly data in EURM from 1/11/ to 31/1/, Bloomberg, Lyxor. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

9 9 Fixed Income European Flows on EU government bonds turned positive Monthly NNA on EU government bond ETFs 1,5 1, 5 US Still strong inflows into US government bond ETFs Monthly NNA on US government bond ETFs 1, , -4 Inflation Linked Negative trend continues for inflation-linked bond ETFs Monthly NNA on inflation-linked bonds ETFs EM debt Flows on emerging market debt collapse Monthly NNA on Emerging debt ETFs 1,2 1, Credit High yield bonds outdo investment-grade peers again Monthly NNA on corporate & high yield bond ETFs Short-bond strategy Short bond strategy ETFs still unpopular Monthly NNA on short bond strategy ETFs 2, Corporate Bonds High Yields 3 1,5 2 1, , -4-1,5-5 Source: Monthly data in EURM from 1/11/ to 31/1/, Bloomberg, Lyxor. counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

10 1 ETF Research Team Marlène Hassine Konqui Head of ETF Research marlene.hassine@lyxor.com Kristo Durbaku ETF Research Analyst kristo.durbaku@lyxor.com Check out the Alpha/Beta Allocator Q3 Read more Read the full analysis on active and passive performance Read more Analysing active & passive fund performance What results tell us about portfolio construction FOR PROFESSIONAL AND QUALIFIED INVESTORS ONLY This document is reserved and must be given in Switzerland exclusively to Qualified Investors as defined by the Swiss Collective Investment Scheme Act of 23 June 26 (as amended from time to time, CISA). LYXOR ETF Research Contact us ETF.Research@Lyxor.com +33 () counterparties or professional clients within the meaning of markets in financial instruments directive 24/39/ce.

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