According to a report by Europe’s largest asset manager Amundi, the investor exuberance witnessed in January accelerated in February with global exchange-traded funds (ETFs) gaining €80.4 billion compared with €68.2 billion last month. But while ebullience was evenly matched either side of the Atlantic in January, this month interest faded in Europe while it gathered pace in the USA.
US investors allocated €68 billion to ETFs while those in Europe only added €9 billion. Asian gains were €3.6 billion.
Equities remained the most popular asset class gaining €60.5 billion while fixed income gained €13.9 billion.
Equities
Allocation to European-registered equity ETFs sharply decelerated in February to €5.8 billion from €23 billion the previous month.
The most popular regional strategies were USA and North America as well as global emerging markets which gained €3.3 billion and €1.7 billion respectively. Chinese equities also gained close to €1 billion. World indices only gained €374m this month – a marked change in the well-established trend where these strategies are usually among the most popular.
Investors also withdrew €2 billion from Japanese equities. There were net outflows from sector and thematic strategies of €630m. The most significant outflows were from health care, consumer discretionary and financials which lost €760m, €678m and €411m respectively. But energy and climate remained popular gaining €856m and €356m each.
Smart beta strategies ETFs gained €2 billion with the majority of the gains made by investors allocating €2.3 billion to value while there were outflows of €724m and €507m from size and quality strategies. This would indicate some investors thought the economy was about to grow sharply. Flows into ESG strategies were €2 billion with global emerging markets gaining €869m – similar to the trends seen for overall equities – while world strategies gained €626m.
As overall world strategies gained €374m this would indicate that all the in-flows were into ESG world indices. Investors also withdraw €881m from Japanese ESG strategies reflecting the broader trend for this region.
Fixed Income
European-registered government bond ETF gained €2 billion. Investors allocated €1.2 billion to USA mid-market bonds and €508m to short-term Eurozone bonds. Investors withdrew €714m from Chinese government bonds as well as €476m inflation-linked US bonds. This conflicted picture would indicate some investors continue to prefer medium and short-duration bonds while others might think inflation has peaked.
There were net outflows of €846m from corporate debt with investors withdrawing €1.5 billion from corporate Eurozone, €513m from high-yield US debt and €371m from high-yield Eurozone bonds. In contrast, US corporate and floating rate bonds gained €1.1 billion and €659m respectively.
ESG fixed income gained €1.5 billion with corporate US and floating rate gaining €1.3 billion and €309m gaining the most. With in-flows into ESG corporate outstripping the broader category, this would indicate all in-flows were into ESG corporate US strategies.
