Investor confidence continued to drive ETF flows in December, with global exchange funds rising by EUR 81.4 billion, according to the latest ETF report from Amundi.
The report revealed that equities accounted for the majority of those allocations at EUR 62.2 billion, while fixed income accounting for a just under a quarter at EUR 19.9 billion.
Alongside monthly findings, the December report offered a full overview for 2020, a year plagued by instability following the global outbreak of Covid-19.
While the pandemic caused capital to be withdrawn from both equities and fixed income ETFs in March, 2020 finished strongly with total global in-flows of EUR 666.7 billion. This was a record year in terms of ETF flows. Equities accounted for just over half of these flows at EUR 358.2 billion, while fixed income was EUR 260.1 billion.
For the full year, European-registered Fixed Income ETFs registered EUR 32.7bn net flows. As with equities, capital had been withdrawn from these products by the end of March but this asset class recovered quickly in April as investors took advantage of low valuations of corporate debt as well as the unprecedented monetary and fiscal support. Meanwhile, full year in-flows into corporate debt reached EUR 10.7bn.
In-flows into government debt took until June to recover but allocations to this asset class outstripped corporate bonds in the last quarter of the year as investors started to feel more positive about the outlook for Asian countries in particular. China accounted for EUR 5.3bn of the total EUR 17.4bn allocated to this asset class for 2020.
In the case of equities for the full year, European-registered equity ETFs registered €54.6bn net flows.
The bulk of the equity in-flows happened during the second half of the year, with capital flowing out of these products at the end of March and the recovery only starting over the summer and accelerating rapidly in final few months of the year. Two classes of products proved particularly popular among investors – ESG and sector/thematic ETFs with total in-flows of EUR 36.1bn – setting a new record for in-flows – and EUR 21.2bn respectively.
The most popular products were Climate and IT attracting EUR 4.5bn and EUR 3.0bn. In-flows in the Climate products accelerated in the second half of the year as more products became available ahead of the European Commission publishing the delegated act of climate-related benchmarks making this an officially recognised index series at the end of the year.
By contrast, there were zero net in-flows into smart beta strategies while main indices ended the year with net in-flows below EUR 5bn, making up less than a tenth of the overall allocation to this asset class.
On a regional level, world equities attracted the majority of the flows at EUR 30.5bn reflecting investors’ preference for a broad exposure. The UK garnered the most country in-flows with investors allocating EUR 2.7bn, most of which happened in December when a trade deal with the European Union was finalised. China was the second most popular country with in-flows of EUR 1.9bn.
