In May the inflows into the global ETF market were positive and equal to 42.1 billion euros. This is what emerges from the latest report by Amundi which analyzes global flows/outflows in the ETF market. Globally, May inflows are still below average, but unlike in April, when investors focused on fixed income, allocations to this asset class in May were nearly equal to those in fixed income. share, with respectively equal inflows €19.5 billion (bonds) and €18.2 billion (equities).
Overview of European flows
North American inflows were roughly flat month-on-month at €33.3 billion, while European allocations were lower month-on-month at 7.2 billion euroswhile Asian investors added €1 billion in flows this month.
The most popular strategies are the US & World large-cap equity strategies which they recorded inflows of 20.5 billion eurowhile investors divested €6.8 billion from large value strategies.
Flows into equity ETFs
While US investors invested €17.6 billion in equity ETFs versus €13.9 billion in fixed-income ETFs, European investors turned out to be more risk averse. In this sense, the European equity UCITS ETFs raised €2.3 billionjust under half of the amount allocated to fixed income ETFs (€5.1 billion).
ETFs with exposure to worldwide indices have been the most popular with inflows of 2.1 billion euros. Investors continued to focus on emerging market equities with investments amounting to €1.2 billion, making May the fifth consecutive month since the beginning of the year with large allocations in this asset class.
Even the Japanese strategies have been popular having raised 500 million euros, numbers that reflect the interest in the Asian market on the part of European investors.
Conversely, investors exited €1.4 billion from European equity strategies, reversing the inflows seen in February and March. Investors divested 600 million euros from energy sector strategies, possibly expressing concern about a potential recession.
The minimum volatility and quality strategies raised €600m and €200m respectivelywhile investors divested €800 million from value strategies, indicating investors’ risk aversion.
ESG equity strategies raised €2.7 billion in May with the global and European indices achieving €1 billion and €600 million respectively, reflecting the continued transition from more traditional strategies towards ESG ones. Investors invested €400 million in emerging market equitiesequal to approximately one third of the total allocation in this asset class.
Record flows into bond ETFs
European bond UCITS ETFs raised €5.1 billion, with government bonds proving to be the most popular with investments of €2.5bn, followed by investment grade corporate debt which fetched €1bn. To date, 2023 is proving to be a record year for allocations in fixed income ETF strategies with funding of 27 billion euro. This trend reflects both investors’ prudence and the improvement in returns on this asset class.
In government bonds, investors preferred euro-denominated debt by investing €1.4 billion in this asset class versus €600 million raised by US dollar debt. For euro-denominated debt, investors opted for strategies with all types of maturity, while they favored long-dated strategies for US dollar-denominated government debt.
Investors have invested 700 million euros in investment grade corporate bonds denominated in euros, with no clear maturity preference, and €300 million in US dollar-denominated investment grade corporate debt.
ESG fixed income ETFs raised a total of €1.6 billion, with inflows of €1 billion for government bonds, €200 million for investment grade strategies and another €200 million for high yield.