ETF flows following Brexit show appetite for safety

European investors pulled large amounts of money out of equities exchange-traded funds following the UK’s shock decision to leave the EU on June 24. According to data compiled by Amundi, Japanese and European equities ETFs were worst hit, registering outflows of €1.2 billion and €1 billion respectively. Although the European equities market has seen volatility for most of this year, the referendum acted as a catalyst for those seeking safe havens. European investors moved into US equities following the June 24 result, with €1.6 billion of inflows. Although valuations are high in the US equities market, it is seen as less volatile and to compound this, minimum volatility smart beta ETFs enjoyed inflows of €1.2 billion. Emerging market equities ETFs, enjoying somewhat of a resurgence since Brexit, saw inflows of €1.5 billion while there was also an appetite for emerging market government debt. This asset class saw inflows of €2 billion. Fixed income ETFs have enjoyed a good year thus far and this continued after the Brexit vote as investors piled into these safe assets. European corporate debt ETFs saw €852.2 million in inflows while its US counterpart had inflows of €786.1 million. Despite extremely low yields, with many countries bonds straying into negatively territory, European government bond ETFs saw inflows of €506.7 million, albeit only those with long durations. Mid duration European sovereign bond ETFs saw outflows of almost €300 million. Post-Brexit, investors are clearly looking for safety as well as some yield, illustrated by the inflows into emerging market debt. With heightened market volatility, it was unsurprising that smart beta ETFs that use min vol as a factor also enjoyed inflows. ©2016 funds europe

Sponsored Profiles

SPONSORED FEATURE: Alternative thinking

Mar 16, 2017

Portfolio Manager Davide Cataldo discusses the results of the Pioneer Investments’ survey on liquid alternatives and how investors can be encouraged to increase their allocation.

SPONSORED FEATURE: Interest rate risk hedging: Swapping to other options

Mar 16, 2017

Heightened margin requirements for cleared and uncleared OTC derivatives pose a challenge for legitimate hedging activities and are driving financial institutions to explore alternative hedging...

SPONSORED FEATURE: Why blockchain could be the fund industry’s next Ford Model T

Mar 16, 2017

Blockchain aims to radically change the way investors can access funds, says Olivier Portenseigne, Managing Director and Chief Commercial Officer of Fundsquare.

SPONSORED FEATURE: Open architecture: In need of protection

Mar 16, 2017

Greater efficiency must be embraced to ensure regulatory changes do not destroy choice for fund buyers, says Bernard Tancré of Clearstream.

Executive Interviews

CEO INTERVIEW: Munro gains three-year track record

Mar 16, 2017

Aviva Investors’ annual results this month were the third set since Euan Munro took over as CEO. Nick Fitzpatrick speaks to him about the ‘Aims’ fund at the heart of the firm’s outcome strategy.

DISTRIBUTION INTERVIEW: Tales of the unexpected

Mar 16, 2017

Laurence Terryn, a fund selector at Candriam, tells David Stevenson how the twists and turns of the past year’s macro environment flavoured her approach to fund selection.



Mar 07, 2017

Funds Europe speaks to leading Luxembourg industry figures about the growing regulatory demands on asset servicers and how to remain profitable in spite of major investments in technology.

SEC LENDING ROUNDTABLE: Both a borrower and a lender be

Jan 11, 2017

Industry heavyweights, including agent lenders, discuss issues affecting the securities lending sector such as regulation and the types of collateral being used.