Bonds drive European ETF rebound

The European ETF industry rebounded in the second quarter, with bonds attracting 70% of new investment, according to data from Morningstar.

Overall inflows reached €33.4 billion throughout the quarter after €4.4 billion of outflows seen in the first three months of the year.

Bonds took the lion’s share of new cash, with €23.3 billion of inflows, while flows into equities totalled €4 billion.

Heavy investment into fixed income was attributed to the numerous measures put in place by central banks around the world, according to the report.

Jose Garcia-Zarate, Associate Director, Passive Strategies, said: “The second quarter was a period of solid flows for bond ETFs, with investment-grade credit at the forefront of investors’ preferences. Despite the upside to equity markets, the monthly flows data shows that investors continued to tread carefully in April and May.”

Both April and May closed with outflows for equity ETFs overall, but sentiment returned by the end of the quarter.

Investors also showed interest in ESG – or environmental, social and governance – ETFs, which drew in €6.7 billion. Equity ESG investments fared much better than their mainstream peers, the data shows.

Within Morningstar’s top five equity categories, three sector groups dominated: technology, healthcare, and industrial materials.

Garcia-Zarate added: “This signals that investors made very pointed investment decisions to fit the expectations of how the economy might respond and evolve to the unfolding Covid-19 crisis.”

© 2020 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

The tension between urgency and inaction will continue to influence sustainability discussions in 2024, as reflected in the trends report from S&P Global.
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

CLOUD DATA PLATFORMS

Luxembourg is one of the world’s premiere centres for cross-border distribution of investment funds. Read our special regional coverage, coinciding with the annual ALFI European Asset Management Conference.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST