European ETFs favoured over US strategies

europeanFlows into European exchange-traded products (ETPs) rose in January on the back of investors looking to reallocate risk, according to BlackRock.

The American asset manager’s 'January 2023 Global ETP' report noted that flows into European equity ETPs were significantly up on the month.

European equity products saw the largest monthly inflow since January 2022, with $7.3 billion flowing into European strategies.

This was led by US-listed European equity exposures, highlighting US-based investors’ shift to look beyond the domestic market, BlackRock noted.

Investors turned away from US equity ETPs, which saw $1.7 billion in outflows in January, marking the first monthly net sell since April 2022.

The $2.1 billion added to Emea-listed European equity included sector allocations to financials and consumer staples.

But the analysis identified the fourth consecutive month of falling global ETP values, down to $62.6 billion in January, on the back of reduced equity buying at the start of the month.

Bond flows climbed to $28.7 billion from $28.3bn in December, while equity flows fell from $43.1 billion in December to $32.8 billion in January.

Sustainable ETP flows remained consistent with levels seen in December 2022, with $4.8 billion added across the US and Europe.

Re-risking was the dominant theme that came through in January ETP flows, said Laura Cooper, senior macro strategist for iShares Emea at BlackRock, with investors balancing “high-quality credit positions with riskier allocations. “

She said: “Global equity buying slowed to start the year, due to investors drawing down US exposures to fund allocations abroad, for example.

“European equities gathered the largest inflow in a year while EM equity exposures extended the momentum seen through 2022,” she added.

© 2023 funds europe

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