New Record Monthly Inflow into European ETPs Deutsche Bank – Synthetic Equity & Index Strategy – Europe
January European ETP Highlights
As of the end of January 2015, global ETP assets were at $2.6 trillion. In January, European ETPs registered a record cash flow of +€12.4bn (+€130mn in the prev. month). Equity and fixed income ETFs were the major contributors of inflows receiving +€7.1bn and +€4.6bn respectively. ETPs tracking commodities experienced €0.7bn of net inflows in January supported by demand in gold and crude oil focused ETFs. During this month, the proportion of ETF trading versus cash equities trading rose in Europe (9.6% in Jan’15 vs. 9.4% in Dec’14) while declined in US (28.1% in Jan’15 vs. 28.5% in Dec’14).
European Equities were preferred over US equities in January
January saw a change in trend from the previous three months where European equities were favoured over US equities based on flows observed into European ETPs. This is evident from the net inflows of +€6bn into European equities as compared to +€889mn for US equities. A similar preference was also seen for US listed ETPs.
Significant inflows into UK equities, German equities and Financials
Although a large portion of cash inflows went into broad based European indices, UK and German equities were also a major investment target for European ETF investors where we observed +€935mn and €514m inflows respectively. In the sector space, Financials was the standout recipient of inflows amongst all sectors.
Dividend ETFs were also popular in January
The low bond yield environment has led to further allocation into Dividend based strategies. Dividend based ETFs accumulated over +€600mn of cash inflows in January. This is a great start to the year considering the total inflow in Dividend ETFs for all of 2013 and 2014 was just over +€2bn each year.
Corporate and Sovereign bonds dominated fixed income ETP flows
Corporate and sovereign bonds were most popular in the fixed income space attracting +€2.2bn and +€1.8bn respectively. Despite the QE announcement which has helped boost flows into both of these categories within the European bond space, we also saw significant flows into European listed ETPs with exposure to US Treasuries and $ Corporate Bonds.