ETF Flows Dropped 12% Globally in July as Equity Buying Fell: BlackRock

Global flows into exchange-traded products dropped 12% last month due to a drop-off in equity investing, according to a report from BlackRock Inc., the world’s biggest ETF issuer.

Exchange-traded fund inflows worldwide fell to $88.1 billion from $99.9 billion in June, according to the company, whose iShares business manages $2.43 trillion among 393 U.S. ETFs. The report also said July was still the second highest inflow month of the year.  

Most of the decline in flows was among U.S. equities, which dropped $6.6 billion to $38.6 billion as investors purchased lower-risk fixed income funds on concerns about inflation, rising interest rates and fears of a recession. Fixed income buying rose “slightly,” BlackRock said, to $30.9 billion, as investors sought safer places to put their money. 

“We have seen some slowdown in equity flows, but I think some of it is seasonal, around summer months,” iShares Chief Investment Strategist for EMEA, Karim Chedid, said in an interview.  

July flows into high yield ETPs reached $2.2 billion while inflows into investment grade bonds ETPs hit $5.1 billion. Consecutive monthly inflows into these two vehicles are a relatively rare occurrence—the last time was in October and November 2022, according to the report. Chedid explained that attractive yields are pushing investors towards fixed income, which is a trend that he expects will continue throughout the year.  

Global ETF Flows 

As investors prepared for earnings season and speculated about the odds of a recession, they poured money into sector ETFs, according to Chedid. Tech investing was the highest in July, as $5 billion was added to those vehicles. Financials saw $2.5 billion in inflows, while energy saw $1.2 billion and industrials brought in $1.6 billion.  

Japanese equity buying took the steepest fall in July, as investors cut flows to $2.6 billion from $7.8 billion in June. Emerging market flows were little changed, at $11.1 billion last month.  

India’s inflows of $1.5 billion in July were the second highest on record, according to BlackRock’s report. The rush was primarily from international investors, as $1.2 billion flowed into U.S.-listed India equity ETPs.  

“In the context of emerging markets, India is likely especially the more strategic horizon that you look at,” Chedid said, adding he expects these flows to be “quite sticky.” 

Note: Corrects headline and first paragraph, and clarifies second paragraph, to show that flows were for all ETFs globally, not only for BlackRock. 

Contact Lucy Brewster at [email protected]