Last updated: 14:57 / Tuesday, 2 June 2015
BlackRock ETP Landscape Report

Global ETP Flows in May Reflect Durable Demand For Non-U.S. Equities

Global ETP Flows in May Reflect Durable Demand For Non-U.S. Equities
  • Global ETPs gathered $18.3bn, though excluding non-U.S. equities flows were largely flat
  • Japan and EAFE exposures led non-U.S. developed markets equities with $5.8bn and $4.2bn, respectively
  • Broad EM equity inflows persisted for a second straight month, with $1.6bn
  • Currency-hedged equity ETP flows were low but accelerate late in the month across EAFE, Europe and Japan funds
  • Pan-European funds brought in $1.6bn, a six-month low

Amy Belew, global head of ETP research at BlackRock comments on the May ETP Landscape Report the firm just presented, that Global ETP flows of $18.3bn were concentrated in developed market EAFE equities and Japan funds. Europe and U.S. flows were modest as mixed economic data for both regions has led to uncertainty over growth prospects. Still, 2015 asset gathering remains ahead of the record year-to-date pace set in 2013 and nearly matched last year on the way to a new full-year high.

Broad developed markets equities gathered $6.4bn as demand remains robust for non-U.S. exposures. EAFE ETPs accounted for $4.2bn, with an additional $2.1bn going to global funds. These categories have quickly accumulated $35.8bn year-to-date and are set exceed the average of $45bn over the past two years.

Japan equities maintained momentum with $5.8bn as the Nikkei 225 Index reached its highest level since 20002. Flows were driven by strength in corporate earnings. Locally-domiciled funds led, though asset gathering has also picked up for U.S.- and Europe-listed funds.

Currency-hedged equities brought in $3.4bn, slowed early in the month by a stretch of U.S. dollar weakening that began in April. Flows have proven responsive to currency movements, and resumed toward the end of May across EAFE, Europe and Japan funds as the dollar exhibited renewed strength.

Broad EM equities gathered $1.6bn, and flows have now trended higher during consecutive months for the first time since August. Improving returns, accommodative Chinese government policies and the pause in dollar appreciation have helped turn flows around.

Fixed income flows overall were flat and have been volatile with investors uncertain as to when rates may begin to move higher. Pockets of strength persist, including U.S. investment-grade corporate funds, which gathered $0.9bn, and EM debt, which added $0.5bn to bring year-to-date flows to $3.2bn. But U.S. Treasury funds shed ($2.8bn). Year-to-date fixed income flows remain ahead of the record pace established last year, driven by investment grade and high yield corporate bonds.