European ETP Market Booms In July

August 06, 2014

The European exchange traded product market is the fastest growing region this year so far at 13 percent, putting it on target for an annualised growth rate of 24 percent, according to data from BlackRock.

July saw the European industry gather more than $10 (€7.5) billion making it the best month for Europe in six years – since 2008 – and accounting for nearly a third of all ETP flows globally in July. So far this year the European ETP industry has gathered more than $42 billion.

Overall global ETP flows reached $32 billion in July on the back of an improving economic outlook and driven by flows into non-US equities, large cap equity, fixed income and commodities.

Ursula Marchioni, head of ETP research EMEA at iShares, said in a statement: “Globally, ETPs attracted inflows of $32 billion during the month. The industry is maintaining a healthy pace and inflows so far this year are broadly in line with what they were this time last year. On a year-to-date basis, the global ETP market is growing at an annualized rate of 17 percent.”

Notably, emerging markets shone in July, posting a fourth month of inflows with $6.3 billion flowing in.  Another region that was favoured by ETP investors was Japanese equity ETPs, which brought in $1.5 billion as the market remained attractively valued and investors grew confident from the government stimulus.

Fixed income flows reached $2.8 billion, but high yield corporate debt began to sell off in the second half of the month despite a stable interest rate picture and still-low inflation

“High yield ETFs experienced redemptions and posted outflows of $3.3 billion. The overall trend in fixed income ETPs is that U.S. Treasury is relatively out of favour compared with broad European government and corporate bond exposures. Interest in U.S. high yield corporate bond is fading, whilst appetite for broad/aggregate bonds remains in place. Flows into fixed income ETPs as a whole in July totalled $2.8 billion, powered by European bond products,” Marchioni said.



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