The month of June was the month with the higher inflows into ETPs globally. This is what emerges from the last one BlackRock ETP Landscape Report which illustrates global trends in ETP flows for the month of June.
Record ETP flows in June
In detail, flows into ETPs in June stood at quota $98.3 billionthe month with the highest inflows of all of 2023, and increasing from $78.0 billion in May. Thanks also to the flows recorded in the month of June, the Total funding of ETPs in H1 stood at $375.9 billionup about 24% from $301.4 billion in the same period a year earlier.
In June equity flows reached $75.8 billionwhile those on fixed income decreased slightly to $26.5 billion, while commodity flows went into negative territory (-$5.1 billion).
A good first half for raising ETPs. In this sense, in the first half of this year, equity flows amounted to 209.5 billion dollarsthus outpacing flows into fixed income ETPs which stood at $165.4 billion, despite EMEA-wide bond flows still having a record six-month period.
“The month of June closes a first half with record flows for bond ETFs at European level, in the light of the constant preference for fixed income by investors looking for yield, commented Laura Cooper, Senior Investment Strategist di iShares EMEA presso BlackRock. June was also the month of highest inflows year-to-date in the record period, at $98.3 billion globally. There was also a rotation at the equity level during the month, with a return to the US after a period of exposure to Europe, a trend that ended up continuing for a much longer period than usual if we look at the first six months of 2023 ”.
Different paths by geographical area
June ETP flows showed a stock rotationcon leaks from Europe and a growing conviction towards the United States; a trend that has accelerated over the past six weeks. US equity flows totaled $45.2 billion, recording the largest monthly inflow for the exposure since October 2022. Meanwhile, at the same time, outflows from European equities reached $4.6 billion, the month with the largest net outflows since August 2022.
For the first time this year, international investors significantly sold European ETPs, accounting for 48% of total June outflows recorded at the level of US-listed European equity ETPs. Despite this, international investor flows into European equities have been stronger this year than historical trends.
In particular, US equity ETP funding was still concentrated on US listed exposures ($42.4 billion), although flows to EMEA-listed funds also increased, reaching $2.3 billion in June, the month of highest inflows since March.
Is gold losing its shine?
Different speech for commodities, which recorded outflows of -$5.1 billion in June. In this sense, the outflows have been driven by thegold that recorded outflows of -$3.8 billion, thus marking the largest monthly outflow on the precious metal since September 2022 and largely offsetting the positive inflow of $4.2 billion in March. Outflows were equally split between US-listed and EMEA-listed ETPs.
Broad commodity exposures also recorded a net sale (-$0.8 billion), marking the fourth consecutive month of outflows and the 13th out of the last 14 (a trend interrupted only in February 2023, with inflows of 0.1 billions of dollars).
Strong buying on emerging market debt
The month of June has stood out since the beginning of the year for positive flows for emerging market debt (EMD) in all three major listing regions (EMEA, APAC and USA). As such, EMD ETPs have recorded a global net inflows of $2.6 billion in Junethe second month with the highest inflows this year.
Flows into APAC-listed EMDs were relatively steady throughout 2023, while EMEA-listed EMDs saw two consecutive months of inflows. Conversely, however, US-listed ETPs turned positive in June for only the third time this year.
Among EMD ETPs listed in EMEA, H1 2023 a clear preference for exposures in local currency has emerged, with inflows of $1.6 billion for local currency products, compared with outflows of $0.7 billion for hard currency funds. EMEA-listed local currency emerging market ETPs have seen inflows for seven of the past eight months, following low allocation interest in 2020 and 2021, and flat flows in 2022.
Is the technology sector under pressure?
Taking stock of the sectoral flows, in the second quarter the technology sector recorded its best quarter since the first half of 2022, adding $11.3 billion, while flows to healthcare rebounded in the second quarter to $5.0 billion. This figure contrasts with the first quarter, when flows flowed into the technology sector at the expense of healthcare. The defensive turn in the second quarter was evident and was accompanied by a reduction in flows to financials (0.6 billion dollars) and industrials (0.7 billion dollars), as well as outflows from materials (-1, $6 billion).
In light of market leadership this year, attention has focused on whether the US tech sector is under pressure. Looking at ETP funding globally, year-to-date US technology flows have accounted for 33% of total technology flows and 7% of total US equity flows. By these metrics – recognizing that positioning goes beyond ETP flows – we believe the US tech sector still has potential.