The global exchange-traded product market attracted total inflows of $22.6 billion of inflows in July, according to the ETP Landscape report released by BlackRock.
Investors embraced equities, the report said, adding $21 billion in such products, primarily with U.S. exposures. Ultra-low interest rates and speculation about European Central Bank monetary easing encouraged some risk appetite with US Large Cap absorbing $6.9 billion while more economically sensitive US Small Cap inflows reached a nine-month high of $2.3 billion. Meanwhile, ETPs offering exposure to European Equities attracted $2.0 billion.
Equity income strategies remained a major draw for investors, according to the report. High-Dividend Yield, Real Estate and Preferred Stock ETPs pulled in a combined $3.1 billion in July. Flows into these categories have been in excess of $1.5 billion for each of the past 11-months.
According to the report, investors utilized a mix of higher-yielding Equity ETPs in their search for above average returns with year-to-date inflows of $21.0 billion scaling 48% above last year’s comparable seven month total of $14.2 billion.
Emerging Markets Equity ETPs drew in $3.6 billion split evenly between broad-exposure funds, with $1.7 billion invested, and country-focused exposure funds with $1.8 billion. ETPs focused on Chinese equities have drawn in almost 35% of year-to-date flows for the category, accounting for $6.4 billion of the total $18.5 billion.
Fixed Income ETP inflows slowed to $2.4 billion in July after recently reaching a historical high of
$10.9 billion in May. Investors again displayed risk appetite favoring High Yield Bonds which attracted $2.0 billion, Investment Grade Corporates which drew in $1.6 billion and Emerging Markets Bonds with $1.2 billion of net inflows.
However, safe-haven Government Bond ETPs saw outflows of $3.7 billion globally.
In comparison, ETP investors pulled back $3.9 billion from US Treasuries as rates along the maturity spectrum reached new lows, encouraging investors to take profits. This was the largest ever outflow for the category after May had seen the highest US Treasury inflows on record of $4.5 billion. German Government Bond ETPs saw outflows of $325 million.
Meanwhile, the report said that investors in European-domiciled funds “took a shine” to Gold ETPs, devoting $0.7 billion to the category, while US-domiciled Gold ETPs surrendered $1.3 billion. A pledge by the ECB President Mario Draghi to preserve the euro led to speculation about monetary easing making gold more desirable as a potential hedge against inflation. Factors impacting US-listed gold ETPs included tame inflation readings, a stronger US dollar and no firm monetary easing commitments from the Federal Reserve.