BlackRock ETP Landscape: Global Flows in September – Equity inflows remained positive despite market volatility.
Global ETP Flows September 2021
$82.4B was added to global ETPs in September, slightly down on August’s $96.5B.
Equity inflows dipped again to $59.4B (vs. $67.5B in August), but remained positive despite market volatility.
Fixed income flows also fell slightly ($23.0B), and commodity ETPs recorded another minor outflow month (-$2.0B).
Key themes in September:
EM picks up
Emerging market (EM) equity flows led the gains with $8.9B of inflows, making September the largest inflow month for the exposure since March. The pickup in EM came alongside a fall in US equity flows to $28.2B (from $48.5B in August), while European equity flows fell flat, hitting the lowest level since October 2020 – the last time there were net outflows from the exposure.
Delving deeper into the EM equity flows, almost half were into US-listed EM equity ETPs, which have accounted for the majority of EM equity flows YTD, while EMEA-listed ETP flows picked up to $1.2B. In line with the overwhelming trend seen over the summer, EM ETP flows were heavily tilted towards single exposures ($6.1B), specifically China.
Credit flows continue
Credit flows continued in September, with $2.4B added to investment grade (IG) and $1.7B to high yield (HY) exposures. HY flows increased to the highest level since April ($3.0B), while the pace of buying in IG dropped from August’s $6.4B.
The drop-off in headline IG flows masks a pickup in EMEA-listed flows to $2.5B – the highest level since February – with weaker sentiment towards US-listed exposures driving the drop-off. EMEA-listed buying continued to account for the majority of the inflows into global HY ETPs for a second consecutive month ($1.4B in September).
Special mention once again goes to inflation-linked bonds, which have been consistently popular since May 2020 and notched up further inflows of $3.5B in September. Rates flows – which had been similarly steady up to September – dropped to $2.7B, vs. $5.3B in August.
Flows across the barbell
In line with the barbell allocations we have seen reflected in sector flows over the past 18 months, September’s two most popular sectors were tech and financials, with $1.8B and $2.7B added, respectively.
We have seen some unwinding of positions in cyclicals more exposed to the manufacturing restart, which looks to have peaked, with outflows from materials and industrials – although YTD flows into both sectors remain in positive territory, with $7.1B and $2.7B added to materials and industrials YTD respectively.
In factor flows, value staged a comeback in September, registering its first inflow month ($1.9B) since June. This came alongside the first net outflows from quality ETPs (-$0.6B) since March 2021, while momentum flows ($1.2B) rose to the highest level since January.
$100B into sustainable in 2021
Despite falling slightly to $6.4B in September (vs. $8.0B in August), year-to-date global inflows into sustainable ETPs have now surpassed $100B. September was the second-lowest inflow month for sustainable ETPs in 2021, just above May’s $6.0B. These lower levels were driven by European exposures, which fell to $4.0B for the month from August’s $6.0B – almost on par with 2021’s monthly low of $3.9B in May.
Within Europe, the lag in flows was most visible across ESG best-in-class and screened strategies. Clean energy strategies had the first outflow month in 2021 (-$38m). Although down month-on-month, best-in-class ESG variants ($2.0B) continued to dominate inflows into European-listed ESG ETPs. US equity strategies with an ESG tilt also registered inflows of $0.3B for September, while $0.2B was added to EM screened strategies.
Breaking down September’s US-listed inflows of $2.5B, lower inflows into the dominant ESG-optimised strategies continued: while up on the previous month’s $915m, the $987m added in September was down from higher levels seen prior to August. Screened strategies maintained their August momentum, posting a near-identical $0.4B for September – still just shy of their all-time monthly record of $0.5B set in February.