Global net new business with exchange-traded index funds (ETFs) and other exchange-traded products (ETPs) picked up again significantly in August 2021, according to asset manager BlackRock: net inflows were $ 90.8 billion in August, after $ 77.3 billion in July . Despite volatile markets, more equity ETPs were purchased at $ 66.2 billion than in the previous month ($ 53.3 billion). Fixed income inflows were stable at $ 23.6 billion, while commodity ETPs saw outflows of $ 1.9 billion for the third straight month.
A closer look reveals that the rotation into more defensive assets continued. For example, equity ETPs in the technology and healthcare sectors saw net inflows, while investors in cyclical sectors withdrew capital on balance. The shift towards less cyclical stocks also continued from a regional perspective, as shown by higher interest in US stocks. At $ 48.3 billion, these accounted for 72 percent of the inflows into stocks, up from 47 percent in July. In contrast, appetite for European, Japanese and emerging market stocks was subdued.
A comparable pattern can be seen in bonds, where government bonds and corporate securities with high credit ratings (investment grade) dominated the inflows. The latter, at $ 6.4 billion, achieved inflows almost nine times as high as in July. Inflation-linked paper was still in demand. In contrast, the trend in emerging market bonds turned negative: Corresponding ETPs recorded net outflows for the first time since the sale in March 2020, amounting to $ 0.9 billion.
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Net inflows into sustainable ETPs with listings in the US and Europe decreased compared to the previous month. They fell to $ 8.3 billion in August from $ 12.2 billion in July. From a regional perspective, the majority of the inflows were accounted for by products with European listings. With regard to the investment strategy, best-in-class dominated – i.e. ETPs that rely on industry pioneers.
The full market report on global ETP capital flows in August 2021 can be found here.
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