Writing in the August edition of its ETP Landscape Monthly Snapshot publication, Blackrock says: “The steady asset gathering has contrasted sharply with the volatility last summer due to the focus on when the Fed would begin to taper. As a result, year-to-date flows of $179.1bn have surged ahead of 2013 and are on track for a new record.”
According to the group, the flows during the month were tightly aligned to current broad investment themes, with emerging markets and Japanese equity ETPs seeing higher inflows on the back of a positive investment outlook
“EM equity funds gathered $4.7bn, with momentum building for funds with broad exposures as well as those with exposure to China,” Blackrock said.
Fixed income flows were also strong in August, Blackrock reported, despite the increased likelihood of US rates rising sooner than previously expected, it said.
Adding: “Much of the asset gathering came in longer-maturity treasuries and investment grade corporate bonds. Notably, high yield recovered from a four week sell off through mid-August to bring in a modest $0.1bn”
On the other side of the equation, European equity ETPs saw outflows of $2.8bn, most of which came from US-listed funds, the firm said.
“The case for European equity, a strong investment theme for the past 12 months, faded in late July and into August. Concerns over the strength of the region’s economic recovery, weaker than expected corporate earnings and the threat of deflation, along with the lack of additional measures from the ECB, have given investors pause,” Blackrock said by way of explanation.
US equity inflows totalled $1.9bn in the month, led by broad US, healthcare and high dividend equity, Blackrock said, but got off to a rocky start.
“US large cap outflows reached ($13.5bn) in the first week of the month. This came in the wake of a 4% drop in the S&P 500 during late July and early August due to deterioration of the situations in Iraq and the Ukraine.5 However, the S&P 500 subsequently rallied to new highs, passing 2,000 for the first time. US large cap ETPs also regained momentum, erasing nearly all of the earlier redemptions for the category.”
