The third quarter of 2024 ended with strong returns across major asset classes, despite some volatility. Stocks were initially hit by weaker US economic data, a Bank of Japan rate hike and thin summer liquidity, but rebounded with the start of the Federal Reserve's rate-cutting cycle and supportive policies from Japan and China.
Flows suggest that European ETF investors certainly focused on the positive. In the third quarter, European-domiciled ETFs captured net inflows of $68.5 billion – marking the highest quarterly total of the year. Year to date, European ETFs have collected $183 billion, ahead of the total for the whole of 2023 ($166 billion) and within striking distance of the yearly record posted in 2021 ($191 billion). Core and US equity ETFs led the flows in September. For the year, equity ETFs have seen net inflows of $130 billion. In the fixed income space, corporate and ultra-short maturity bond ETF exposures saw the highest inflows, with a geographic focus on the euro area and US.
Alternative and multi-asset ETFs both had net inflows in September to finish Q3 in positive territory. Positive flows for commodity ETFs in September were not enough to offset the net outflows in July, with the category suffering net outflows for the quarter.
Equity ETFs benefit from strong Q3 inflows
European ETF cumulative flows – cumulative 12 months by asset class ($ billion)
Source: ETFbook, as at 30 September 2024.
Core equity ETFs continue gathering inflows
Equity flows by category: Month to date ($ million)
Source: ETFbook, as at 30 September 2024. The ‘segment’ category includes equity exposures which target specific market capitalisation segments, such as small-cap, mid-cap and large-cap. The ‘market access’ category includes difficult-to-access markets such as emerging markets. The ‘basket’ category includes strategies that combine several stocks as the underlying exposure, such as FAANG stocks.
We saw net inflows across most of the equity ETF categories we track. Core equity ETFs added $8.1 billion in inflows, while sustainable and smart beta ETF strategies gathered $3.4 billion and $2.9 billion, respectively. Thematic products, however, endured net outflows of -$1.0 billion in September. Year to date, equity ETFs overall have seen $129.8 billion of net inflows.
US and developed market ETFs again drive net inflows
Equity flows by geographic exposure: Month to date ($ million)
Source: ETFbook, as at 30 September 2024.
United States and developed-market ETFs again led the pack in terms of geographical ETF exposures, collecting $9.1 billion and $3.3 billion of inflows, respectively, in September. Investors shunned various single-country ETF exposures, however, as Japan, the UK, Mexico, Germany and Italy products all weathered net outflows.
Corporate and ultra-short maturity bond ETFs lead fixed income flows
Fixed income flows by category: Month to date ($ million)
Source: ETFbook, as at 30 September 2024.
Corporate bond ETFs were the most popular with European ETF investors in September as they attracted $3.2 billion in assets. Ultra-short maturity bond products also saw inflows, gathering $1.4 billion. Conversely, inflation-linked and convertible bond strategies saw outflows of -$140 million and -$108 million, respectively, during the month. In total, bond ETFs have attracted $53.8 billion of net inflows so far in 2024.
Euro area and US bond ETFs capture highest net inflows
Fixed income flows by geographic exposure: Month to date ($ million)
Source: ETFbook, as at 30 September 2024.
Euro area bond ETFs topped the table in September, collecting $3.6 billion in inflows. United States and emerging-market exposures also saw demand, garnering $1.3 billion and $1.2 billion of net inflows, respectively. At the other end of the spectrum, developed-market bond ETFs endured net outflows of -$109 million.
Vanguard range sees net inflows of $2.1 billion in September
Vanguard UCITS ETF net flows: Month to date ($ million)
Source: ETFbook, as at 30 September 2024.
The Vanguard UCITS ETF range captured net inflows of $2.1 billion in September, with the majority of ETFs in the range recording positive flows. Inflows were split between Vanguard’s equity UCITS ETF range ($1.2 billion) and fixed income UCITS ETF range ($863 million), while the multi-asset UCITS ETF range saw net inflows of $30 million.
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