Lyxor ETF Money Monitor: Net new assets in the European ETF market rebounded slightly in June to €2.6bn from the €2.1bn we saw in May….
By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst
The month confirmed a trend we’ve been monitoring recently, with fixed income ETFs attracting most of the inflows (€5.6bn).
In contrast, equity ETFs suffered their worst month ever (-€4.3bn).
Meanwhile, flows into commodity and Smart beta ETFs returned to the red (-€78m for both categories).
ESG ETFs were again one of the biggest winners in June.
They enjoyed their best month ever with €1.4bn of inflows, driven by broad strategies.
Focus: The search for yield
Investors have redoubled their search for yield in the current very low interest rate environment.
With German, French and Japan government bonds’ yields negative, corporate bonds (both IG & HY) and income-generating equity strategies have been in high demand.
In Europe, flows surged into these kinds of strategies. Year-to-date, they have gathered €16.7bn of assets – around 47% of overall ETF market flows.
This accelerated again in June after Mario Draghi commented on the possibility of adding more QE in Europe and central banks in Japan and the US reiterated their dovish stance, which pushed all interest rates simultaneously in negative territory.
Monthly inflows reached a high for the year of €4.6bn – an amount not seen since 2015 – and accounted for 74% of total monthly flows.
The general policy dovishness and the historical correlation between US 10-year yield moves and flows into, or out of, global corporate credit and income-generation ETFs flows, mean it’s likely these categories will retain their popularity with investors for months to come.
We expect to see significant inflows along the way.