In October 2023, global Exchange-Traded Products (ETPs) witnessed steady inflows, adding $66 billion, consistent with previous months.
However, there was a notable shift in investment trends, with fixed income (FI) inflows almost doubling to $30 billion, surpassing equity inflows which declined to $34.3 billion.
Significant activity was observed in rates buying, recording the highest inflows since March at $30.4 billion, primarily into US rates ETPs. European rates ETPs also saw a notable increase, especially in core countries like Germany and France.
In the US rates sector, October saw a balanced distribution between short and long-term investments. Meanwhile, credit ETPs experienced outflows, particularly in investment grade and high-yield segments.
Regionally, US equities led the market, but emerging market equities saw their first net outflows since Q2 2021. European equities indicated a tentative return to favour. Japanese equity ETPs continued to attract investment, especially in EMEA-listed funds.
Sector-wise, energy and technology ETPs led inflows, while financials experienced global outflows, particularly in the US. However, Japanese financials bucked the trend with significant inflows year-to-date.
Laura Cooper, senior investment strategist for iShares EMEA, BlackRock, said, “Despite an ongoing rates rout in cash markets, October saw a significant pick up in flows to government bond ETFs - almost double the flows seen in September. The majority of these flows headed to US treasuries, with buying on par across long and short-term exposures.
"This comes after the front end of the US Treasury curve was favoured in recent months, with investors now increasingly extending UST duration positions amid the steep selloff, in line with our recent tactical upgrade of long USTs to neutral.”
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