Renewed emerging market interest drives ETPs

Global assetsThe global exchange-traded product (ETP) market continues to reap net inflows from investors, with emerging market ETPs playing a pivotal role, data reveals.

In each month this year, emerging market flow totals exceeded the overall total for 2015, and year-to-date flows reached half 2012’s total.

Emerging market equity ETPs received inflows of $3.1 billion (€2.7 billion) in April, on the heels of $6.8 billion last year. Emerging market debt ETP flows reached $2.1 billion.

BlackRock’s ETP Landscape report for April shows that total ETP flows – not just emerging markets – for the month reached $11.1 billion, the equivalent of €9.84 billion. This was a comparatively modest total, as the number tops the figures for just two other months over the past year.

However, emerging market products (including equity, debt and investment grade corporate bonds) notably continued to flourish as other categories fell from favour.

Many investors have eschewed emerging markets since 2013, and it was widely expected that China’s ‘Black Monday’ crash in September last year, and the Federal Reserve rate hike in December, would further dampen sentiment. However, a sluggish dollar, low interest rates worldwide and stabilising commodity prices have evidently pushed investors towards the category.

Overall, it is over two years since the ETP market experienced a monthly outflow. Despite a rocky start to the year, global flows into ETPs have already reached $13.7 billion in the first four months of 2016, more than half of 2015’s total.

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