ETF flows following US election

ETF investors appear to have learned lessons from the Brexit vote as trading volumes were significantly reduced after the Donald Trump victory in the US election.

For example, the trading volume for iShares European ETFs was $3.15 billion (€2.89 billion) on Wednesday – lower that the $5 billion volume on June 24 following the Brexit vote.

Wei Li, Europe, Middle East and Africa head of investment strategy at iShares, said: “European investors appear to have learned from the Brexit vote experience, with speculative buying to search for relative value occurring earlier in the day...”

While equity markets initially sold-off in the immediate aftermath of the Trump victory, throughout the European trading session risk sentiment improved and Li said this was evidenced by inflows into equity exposures.

However, Li added that ETFs with exposure to ‘safe haven’ assets such as gold – which gathered assets in the run up to the election – continued to see elevated trading volumes.

Tradeweb, an electronic trading platform, found that €1.08 billion of Europe-listed ETFs were traded on its platform on the day of the US election result. Equity sectors proved to be the most popular ETF category – except for emerging markets where 81% of trades were by sellers, compared to 87% of trades in US equities which were from buyers.

Commodities and emerging market bond ETFs saw net selling on the day, with volumes of €62.6 million and €106.7 million, respectively.

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