Follow the flows

Global Exchange Traded Products (ETPs) attracted over $1 billion during the first week of April as US equity ETPs suffered significant outflows. It followed the largest ever March inflow for European-domiciled ETPs.

The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results

For the first time since October 2016, equities experienced a net weekly outflow, with fixed income ETPs inflows exceeding equities for the first time since January this year.

Rob Powell from BlackRock says the attractive and relatively high quality yield have been key drivers of flows into fixed income. He also says they are seeing increasing usage of Exchange Traded Funds (ETFs) in place of derivatives given the increasing liquidity profile of the product, which provides better tracking with less basic risk to the underlying cash bond markets.

The $10.3 billion withdrawn from US equity ETPs is the largest weekly outflow from this category since May 2016 and the seventh largest since 2012. On the flip side, broad developed markets, European and emerging market equities across all domiciles continued to see broad-based buying.

This highlights the shift in focus to the ‘pure’ reflation theme whereby emerging markets are a likely winner in what is a higher global growth environment.

When it comes to Exchange Traded Commodities (ETCs) flows into gold funds domiciled outside of Europe have been less consistent, with European investors appearing to be more focussed on portfolio diversification than those elsewhere.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.