What happened last month? - PDF Free Download

1 Informed Investor: Money Monitor February 219 By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst European ETFs flows accelerate Net new assets in the European ETF market accelerated in February to reach 13.7bn. All categories (equities, fixed income, commodities and smart beta) enjoyed a positive month for the first time since last February. attracted most of the inflows ( 8.2bn) with three regions standing out: developed markets (+ 2.8bn), global equities (+ 3.4bn) and emerging markets (+ 1.9bn). Fixed income ETFs continued to enjoy massive inflows (+ 5.4bn) driven by corporate bonds and emerging market government bonds (+ 1.8bn and + 1.4bn respectively). Flows into Smart Beta strategies slowed but remained positive (+ 462m) and commodities (+ 2m) finally ended a month in the black after seven successive negative months. What happened last month? ETF flows increased to 13.7bn from 7.6bn Still an outstanding start to a year for ETFs 13.7bn Significant increase for equities 8.2bn Another strong month for fixed income 5.4bn Positive month for commodities finally 2m Sustained Smart Beta flows 462m Source: Monthly data in EURM from 1/2/219 to 28/2/219 Bloomberg, Lyxor. Note: This report is based on the data available on 1/1/218. Asset and flow data may be slightly adjusted as additional data becomes available.

2 What were the major trends? Strong rebound for equities 8.2bn Monthly net inflows on European Equity ETFs Significant rebound for US equities Europe equities still suffering 1,81 of wh. World 3,43 Global 2,814 Developed 1,37 of wh. US 1,946 Emerging Developed market equity flows turn positive -41 of wh. Asia Pacific -417 of wh. Europe Another strong month for emerging market equities Flows surged into global equities Another robust month for fixed income 5.4bn Monthly net inflows on European Fixed Income ETFs 1,223 Developed Virtually flat month for Europe government bonds 94 of wh. US 1,44 Emerging 1,88 Corporate Bonds High yield ETF flows accelerated sharply 981 High Yield Inflationlinked bond flows turn negative -13 of wh. Europe More strong flows into emerging market government bonds Investmentgrade bond flows tripled -271 Inflation Linked -345 Money Source: Monthly data in EURM from 1/2/219 to 28/2/219, Bloomberg, Lyxor.

3 Special focus Sentiment reverses for corporate bonds Flows surged into investment-grade corporate bonds in February 219 given a more positive trend in the credit market. Year to date, inflows already amount to 2.4bn, offsetting all of the 218 outflows (- 1.6bn) in just two months. All of the positives are to be found in the European corporate bond market where the ECB has found itself unable to remove all of its support given the sluggish economy and now is to launch another TLTRO. In contrast, the market suffered last year as the central bank wanted to conclude its QE programme and looked set to withdraw more of its support. Strong inflows 1.8bn Investors are returning to this segment of the market on hopes that slowing growth will force the ECB to remain dovish. This has already had an impact on German bond yields, which have tightened since the beginning of the year. In fact, euro corporate bond flows seem to have been inversely correlated to German interest rate moves since the start ECB LTROs. Should the ECB continue to increase stimulus, we expect positive flows into corporate bonds to continue in 219. Developed market investment-grade bond monthly NNA vs. 1Y German government yield 3, 2, - - - 215 215 215 215 215 215 216 Second LTRO 216 216 216 216 216 217 217 217 217 217 217 Hope of new LTRO 218 218 218 218 218 218 218,2%,%,2%,4%,6%,8% 1,% Investment-grade bond ETF monthly NNA 1Y German yield (axis in reverse order) Source: Monthly data from 1/1/215 to 28/2/219, Bloomberg, Lyxor Cross Asset Research, Lyxor ETF.

4 What does it all mean? Near-record YTD flows for European ETFs ETFs on the rise Total AUM is up 11.6% since 218 21.3bn 76bn YTD net Inflows on European ETFs by asset class Strong YTD flows for equity ETFs Total 9,815 YTD record flows for fixed income ETFs Total Fixed Income 11,526 553 of wh. Asia Pacific of wh. World 2,21 Emerging 4,379 Global 3,98 Developed 3,2421 of wh. Europe 1,4 93 of wh.us 1,327 Emerging 3,783 2,433 Corporate bonds 1,116 High Yield 28 Inflation Linked Developed -1,526 of wh. US -974-1,266 of wh. Europe -3528 Money -8 Commodities Commodity ETF flows still in the red Discover more 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 www.lyxoretf.co.uk/en/instit/etfresearch/type/monthly-flows Source: Monthly data in EURM from 1/1/219 to 28/2/219, Bloomberg, Lyxor.

Appendix: The month in numbers European ETFs in February 219 Net Inflows (EURm) NNA increased to 13.7bn from 7.6bn Monthly NNA on European ETFs Total Outstanding start to a year for European ETFs Cumulated monthly NNA assets on European ETFs 5 219 219 7,597 218 4,42 218 2,375 218 753 218 5,858 218 2,296 218 4,328 218 811 218 218 1,158 671 218 1,332 4, 6, 8, 1, 1 14, 16, 13,733 1, 216 217 218 219 9, 8, 7, 6, 5, 4, 3, 2, 1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Equity Modest start for equities Cumulated monthly NNA on equity ETFs Equity Emerging Best start ever for emerging market equities Cumulated monthly NNA on emerging market equity ETFs 7, 216 217 218 219 6, 5, 4, 3, 2, 1, 1, 8, 6, 4, 216 217 218 219-1, Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Fixed income YTD record for fixed income flows Cumulated monthly NNA on fixed income ETFs Commodities Weak start for commodity ETFs Cumulated monthly NNA on commodity ETFs 3, 216 217 218 219 3, 216 217 218 219 25, 2, 2, 15, 1, 5, - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec - Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Monthly data in EURM from 1/1/216 to 28/2/219, Bloomberg, Lyxor.

6 Overview by asset class Equity Strong increase for equity ETFs Monthly NNA on equity ETFs 1, 8, 6, 4, DM equity ETFs outdo EM peers Monthly NNA on developed vs. emerging markets equity ETFs 8, Developed Emerging 6, 4, - -4, - 218 218 218 218 218 218 218 218 218 218 219 219-6, 218 218 218 218 218 218 218 218 218 218 219 219 Fixed Income Fixed income ETFs continued their strong start to the year ( 5.4bn) Monthly NNA on fixed income ETFs DM bonds outdo EM peers again Monthly NNA on developed vs. emerging markets fixed income ETFs 7, 6, 5, 4, - 4, Developed Emerging - 218 218 218 218 218 218 218 218 218 218 219 219-218 218 218 218 218 218 218 218 218 218 219 219 Commodities Commodity ETFs flows finally turn positive Monthly NNA on commodity ETFs...mainly due to a rebound for broad commodity ETFs Monthly NNA on broad & precious metals ETFs 8 6 4 2-2 -4-6 -8-218 218 218 218 218 218 218 218 218 218 219 219 Broad Commodities Precious Metals 8 6 4 2-2 -4-6 -8-218 218 218 218 218 218 218 218 218 218 219 219 Source: Monthly data in EURM from 1/3/218 to 28/2/219, Bloomberg, Lyxor.

7 European Another negative month for European equity ETFs Monthly NNA on European equity ETFs German equity flows collapse Monthly NNA on German equity ETFs - - - 4 2-2 -4-6 -8 - -4, 218 218 218 218 218 218 218 218 218 218 219 219-1,2 218 218 218 218 218 218 218 218 218 218 219 219 Negative trend for Spanish and Italian equities Monthly NNA on peripheral Europe equity ETFs Slight rebound for Europe equities Monthly NNA on developed Europe region equity ETFs 1-1 -2-3 -4 - - - - -2, - 218 218 218 218 218 218 218 218 218 218 219 219-218 218 218 218 218 218 218 218 218 218 219 219 Eurozone equity flows remain negative Monthly NNA on Eurozone equity ETFs Outflows from financials accelerate further Monthly NNA on financials Europe equity ETFs 2-1 -1-2 - -3 - - -2, -4 - -6-7 - 218 218 218 218 218 218 218 218 218 218 219 219-8 218 218 218 218 218 218 218 218 218 218 219 219 Source: Monthly data in EURM from 1/3/218 to 28/2/219, Bloomberg, Lyxor.

8 (cont d) US & Japan equities US equity flows rebound Monthly NNA on US equity ETFs Japan equity flows turn negative Monthly NNA on Japan equity ETFs - - - - - - 218 218 218 218 218 218 218 218 218 218 219 219-218 218 218 218 218 218 218 218 218 218 219 219 Emerging market equities Flows into emerging markets equities are still strong Monthly NNA on emerging market equity ETFs 4, Broad EM equities enjoyed another positive month Monthly NNA on broad EM equity ETFs - - - 218 218 218 218 218 218 218 218 218 218 219 219-218 218 218 218 218 218 218 218 218 218 219 219 Smart Beta / Value Smart beta flows slow but are still in the black Monthly NNA on smart beta ETFs - Little interest in Value strategy Monthly net new assets on value style equity ETFs 4 2-2 -4-6 -8-218 218 218 218 218 218 218 218 218 218 219 219-218 218 218 218 218 218 218 218 218 218 219 219 Source: Monthly data in EURM from 1/3/218 to 28/2/219, Bloomberg, Lyxor.

9 Fixed Income European Virtually flat month for EU government bonds Monthly NNA on EU government bond ETFs 2, - US Ninth successive positive month for US treasuries Monthly NNA on US government bond ETFs 1,2 8 6 4 2-2 - 218 218 218 218 218 218 218 218 218 218 219 219-4 218 218 218 218 218 218 218 218 218 218 219 219 Inflation Linked Inflation-linked bond flows turn negative Monthly NNA on inflation-linked bonds ETFs 4 3 2 1-1 -2-3 EM debt Another strong month for EMD Monthly NNA on Emerging debt ETFs 2, -4 - - 218 218 218 218 218 218 218 218 218 218 219 219-218 218 218 218 218 218 218 218 218 218 219 219 Credit IG bonds outdo HY peers again Monthly NNA on investment-grade & high yield bond ETFs Short-bond strategy More outflows from short bond strategies Monthly NNA on short bond strategy ETFs Investment Grade High Yield 2 1-1 -2 - -3-4 - 218 218 218 218 218 218 218 218 218 218 219 219-218 218 218 218 218 218 218 218 218 218 219 219 Source: Monthly data in EURM from 1/3/218 to 28/2/219, Bloomberg, Lyxor.

1 ETF Research Team Marlène Hassine Konqui Head of ETF Research +33 1 42 13 59 56 marlene.hassine@lyxor.com Kristo Durbaku ETF Research Analyst +33 1 57 29 25 96 kristo.durbaku@lyxor.com Check out the Alpha/Beta Allocator Q3 218 Read more Read the full 217 analysis on active and passive performance Read more Analysing active & passive fund performance What 217 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 ()1 42 13 59 56

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