Last updated: 21:35 / Thursday, 15 September 2016
Lyxor ETF Barometer

European ETF Market Flows Slowed in August 2016

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European ETF Market Flows Slowed in August 2016
  • Equity ETF inflows were significant at EUR 2.1 billion, continuing the trend of the last two months
  • Fixed income ETF inflows almost halved in August to EUR 2.7 billion compared to July, close to their one-year monthly average
  • Commodity ETF flows halted with EUR 76 million of outflows

Net New Assets (NNA) during this month amounted to EUR 4.7 billion, still 21% above the one-year monthly average level. Total assets under management are up 7% vs. the end of 2015, reaching EUR 481 billion, including a slight rise in the market (+3.9%). Emerging Market and investment grade corporate bond ETFs gathered most in this environment of heightened uncertainty.

Equity ETF inflowswere significant at EUR 2.1 billion, continuing the trend of the last two months. On developed markets, flows were limited at EUR 339 million. Positive news in the US economic data helped sustain strong inflows of EUR 1.2 billion. However, in Europe the less positive economic data prompted outflows of EUR 1.1 billion from European ETFs. Emerging Market equity ETFs continued their rebound with inflows of EUR 1.5 billion. Flows were focused on broad index exposures, which would suggest that investors were taking a tactical position ahead of the FED’s decision on rates. Smart Beta ETF flows lost momentum, gaining just EUR 435 million in new assets after hitting a one-year record high in July. This month, Smart Beta investors favoured dividend and factor allocation products over minimum variance ETFs in their search for yield and alternative sources of return.

Fixed income ETF inflowsalmost halved in August to EUR 2.7 billion compared to July, close to their one-year monthly average. On developed countries, flows were mainly focused towards investment grade corporate bond ETFs, which saw EUR 1.4 billion of new assets following sustained ECB action. Emerging Market Debt continued to see some inflows of EUR 833 million although at a slower pace than the one-year record high reached in July of EUR 2 billion, which was fueled by the very low/zero interest rate environment and investors’ hunt for yield. The rebound in High yield Bond ETFs of July was short lived with EUR 62 million of outflows in August. Interestingly, flows on inflation-linked ETFs reached a one-year record high with inflows of EUR 546 million. Flows here were mainly on US exposures as economic growth seems to accelerate.

Commodity ETF flowshalted with EUR 76 million of outflows, which compares to the one-year record high of EUR 1.1 billion reached in July.

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