European ETF flows “way above” annual average

European ETF inflows were driven by equity funds in the first nine months of the year, according to industry data.

Research from Lipper shows that equity ETFs saw €56.7 billion of inflows versus €41.1 billion for bonds.

Equity and bond ETFs had the same  inflow levels over the course of January and continued to follow the same growth path until July, according to Lipper’s ‘Review of the European ETF Industry: Q3 2023’.

Detlef Glow, head of research at Lipper, said in the report that it was not surprising that flows into equities outpaced flows into bonds, given the current market environment.

Inflows into bond ETFs slowed down in August and September, while equity ETFs gathered inflows at the same pace as in the month before.

Glow said the market sentiment in September was still driven by hopes that central banks -especially the US Federal Reserve – may have reached the last phase of the fight against inflation and may start to keep interest rates “at least stable quite soon.”

Glow added: “Some investors expect that there might be room for decreasing interest rates later this year which might be reflected by the estimated inflows in bond ETFs. Nevertheless, these estimates are under scrutiny since the Fed stated after its September meeting a hawkish view, as the rate outlook still includes one more rate move this year and fewer rate cuts in 2024.”

There are some concerns about geopolitical tensions and continued issues with disrupted delivery chains, as well as the continued possibility of recession in the US and other major economies around the globe, said Glow.

He also pointed out that the estimated net inflows of €105.2 billion over the first nine months of 2023 were “way above” the annual average of €51.1 billion for the European ETF industry.

© 2023 funds europe

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