Highlights

  • European-domiciled ETF flows moved back into positive territory in August. The ETF market saw $1.3 billion of inflows in August, having experienced outflows of a similar magnitude in July1.
  • Fixed income was the biggest driver of inflows into European ETFs, adding $5.3 billion of net new money over the month.
  • Equity ETFs were the largest detractors with -$3.3 billion of outflows, after seeing -$2.7 billion of negative flows in July.

 

European-domiciled ETF flows returned to positive territory in August as risk assets rallied in the first half of the month before unwinding most of their gains during the remainder of the period. The ETF market saw inflows of $1.3 billion in August, after suffering outflows of roughly the same amount the previous month. While commodities and equity products again experienced negative net flows for the month (-$3.3 billion and -$755 million respectively), fixed income ETFs continued to receive inflows in August ($5.3 billion), adding to the inflows observed in July ($4.3 billion).

Within equities, core (-$2.3 billion), sector (-$1.4 billion) and smart beta (-$1.1 billion) ETF exposures were the main drivers of outflows, pushing the asset class’s net flow into negative territory (-$3.3 billion) over the month. United States (-$4.3 billion), eurozone (-$1.8 billion) and Europe (-$418 million) products were the biggest detractors within core ETFs, while global ($3.5 billion) and world ($996 million) core exposures saw positive flows. Sector ETF outflows from Europe (-$1.1 billion) and world (-$365 million) exposures were in part offset by inflows into United States sector products, which took in $188 million of new assets. Outflows from smart beta vehicles came mainly from world (-$538 million) and Europe (-$476 million) regional exposures. Sustainable ETF strategies led the inflows in August, taking in $1.4 billion. The large part of the sustainable inflows went into world ($572 million), United States ($452 million) and emerging market ($233 million) exposures. These inflows were in part offset by outflows of -$139 million from global sustainable ETF exposures.

In fixed income, total inflows of $5.3 billion were predominantly attributable to positive flows into corporate and sovereign bond exposures, which registered new assets of $2.9 billion and $2.8 billion respectively in August. Corporate bond ETF inflows came mostly from eurozone ($2.0 billion) and United States ($1.2 billion) products, which were also the leading corporate exposures the previous month. With $542 million of inflows, aggregate bond exposures also received support from investors, with emerging markets ($348 million), global ($296 million) and eurozone ($179 million) exposures the most popular in August. United States aggregate bond vehicles saw net outflows of -$300 million. Within government bond ETFs, US Treasury ($1.3 billion), emerging markets ($1.1 billion) and eurozone ($518 million) exposures accounted for the largest inflows, while China sovereign exposures saw the greatest negative flows (-$420 million). Inflation-linked bond ETFs continued to suffer outflows in August (-$603 million) with United States (-$374 million), global (-$120 million) and eurozone (-$108 million) inflation-linked products the worst-hit exposures.

Commodity ETFs suffered redemptions of -$755 million in August, mainly driven by broad allocations (-$654 million) and commodities vehicles excluding agriculture (-$60 million).

Vanguard UCITS ETFs

In August, the Vanguard UCITS ETF range captured net inflows of $528 million, up from the $449 million of flows recorded the previous month. Flows were again led by Vanguard’s fixed income UCITS ETF range ($395 million), followed by equity ($117 million) products. In equity, the Vanguard FTSE All-World UCITS ETF ($213 million) and the Vanguard FTSE Developed World UCITS ETF ($56 million) saw the largest inflows. The Vanguard S&P 500 UCITS ETF and Vanguard FTSE 250 UCITS ETF saw outflows of -$170 million and -$89 million respectively.

The Vanguard fixed income UCITS ETF range experienced net inflows of $395 million in August, primarily driven by inflows into the Vanguard Global Aggregate Bond UCITS ETF ($115 million), the Vanguard USD Emerging Markets Government Bond UCITS ETF ($98 million) and the Vanguard EUR Eurozone Government Bond UCITS ETF ($88 million).

The Vanguard LifeStrategy UCITS ETF range continued to see investor interest, attracting $16 million of inflows.

 

1 Source: Vanguard, ETFbook, as at 31 August 2022. Data extracted on 2 September 2022.

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