ETP flows head for record year despite slowdown

Trading floorModerate flows during September have not derailed the strength of asset gathering in exchange-traded products (ETPs), which are still on track for a record year.

Global ETP flows slowed to $8.9 billion (€7 billion) in September from $25.9 billion in August. However, total flows of $190.9 billion for the first three quarters of 2014 suggest a good chance of reaching the $262.7 billion record for 2012, according to research from BlackRock, the owner of exchange-traded fund provider iShares.

The BlackRock ETP landscape September report reflects a recent finding that investors have moved to less risky positions. The BlackRock research shows that investors have put aside improving global growth and strong relative value opportunities outside the US, in favour of less risky exposures. US large market capitalisation saw inflows of $12.6 billion, while $3.1 billion went to broad developed equity and $2.6 billion to US aggregate bond funds.

In emerging market equities there were signs of increasing allocations and attractive valuations, despite overall outflows of $1.5 billion. Country outflows were driven by China, with $2.0 billion taken out of Asia-listed funds, though US-listed China funds had more success with a consecutive month of inflows at $0.3 billion.

The report found that Japanese equity lost $1.2 billion, despite accelerating ETP flows at the beginning of the year, as investors wait to see the effect of recent government reforms. Pan-European ETPs also lacked popularity in spite of European Central Bank (ECB) credit easing measures, with outflows of $1.9 billion.

In contrast, Brazil and India performed more positively during the autumn month, with the Latin American country receiving $0.8 billion for September and India's inflows reaching $2.1 billion for the year-to-date, reflecting confidence in the country's new prime minister, Narendra Modi.

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