A ‘remarkable’ April for ETP flows

Varia Pechurina, Investment Strategies for ETFs and Index Investments at BlackRock, talks to IGTV’s Victoria Scholar and the notable ETP flows in April.

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A ‘remarkable’ April for ETP flows

Global exchange traded product (ETP) flows hit $35.4 billion in April, doubling from $17.7 billion in March, according to BlackRock’s latest ETP landscape report. Global fixed income flows hit $17.3 billion in April, which represents a ten-month high. US equities added $6.9 billion, versus a redemption of $7.1 billion in March, thanks to a strong earnings season. Gold flows reached $2.9 billion, the highest level since July 2016.

Where were the outflows?

In terms of other notable flows, BlackRock highlights that European equities saw redemptions of $5.7 billion in April. European equity funds saw two consecutive months of outflows for the first time since late 2016.  Japanese equity flows slowed from $13.6 billion in March, to just $0.4 billion in April.

Commodities leading the charge

April net inflows into EMEA-listed ETPs hit $1.4 billion, according to BlackRock’s latest ETP EMEA flows update. Commodities led the way, with monthly inflows hitting $1.7 billion. The majority of flows went into gold, where $1 billion of assets were gathered. BlackRock remarked that, ‘ongoing trade tensions and mixed equity market sentiment led to a spike in gold inflows, which reached the highest level since August 2016. Geopolitical events also drove a flight to safe haven assets in 2016’. Broad commodity ETPs gathered $686 million in April, thanks to ‘the uptick in the commodity price and continuously strong global growth’. 

(Source: BlackRock Global ETP Landscape, a BlackRock tool that sources data from BlackRock and Markit, at 30 April 2018)

Fixed income in demand

Fixed income flows saw $1.5 billion flow into EMEA-listed ETPs with demand in rates skewed towards short duration ETPs. BlackRock says, ‘the short end of the curve looks appealing to investors, given the opportunity to get yield above inflation levels and, at the same time, hide in safe havens amidst jittery market sentiment’. However, emerging market debt and investment grade ETPs saw outflows of $475 million. 

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