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“Unprecedented” inflows into healthcare ETPs in April

healthcare_investmentHealthcare-focused exchange-traded products saw “unprecedented” levels of new investment in April, as overall inflows for the global ETP sector reached $68.6 billion (€63.3 billion).

A recovery in risk sentiment was said to be the driver behind the flood of new cash, according to US fund house BlackRock, which published the figures.

At a sector level, investors allocated $7.3 billion to healthcare ETPs – the largest monthly inflow on record, beating the previous record set in November 2016 when Donald Trump was elected as US president.

There has been increasing focus on the healthcare sector amidst the current pandemic. “Attention on medical device production and pharmaceutical innovation has offered investors two rationales for investing in the sector,” BlackRock said in a statement.

US healthcare equity ETPs took the lion’s share of inflows, with $6.1 billion of new cash. European healthcare ETPs brought in $0.5 billion which, although a small figure by comparison, was a record in itself, according to the firm.

US equity ETPs overall saw their largest weekly inflows since September last year, attracting $17.7 billion at the start of April. These flows dropped off towards the end of the month, however, as investors de-risked leaving the net figure for the month set at $18.3 billion

Commodity ETP flows also benefitted from the increase in risk appetite, bringing in $21.4 billion, surpassing the previous monthly inflow record by almost $10 billion.

Inflows into both gold and crude oil ETPs hit new highs, with US and Asia-Pacific listed crude oil ETPs seeing the majority of new cash, according to the report. Gold ETPs added $9.2 billion in April, up from $7.7 billion in March.

A return to positive buying in fixed income offset the drop off in equity buying – which has been hit especially hard by the market volatility sparked by the Covid-19 pandemic.

Credit saw record inflows in April, following on from the positive momentum in the last two weeks of March, with high yield drawing in $8.4 billion, and investment grade attracting $13.3 billion of new cash.

Outflows continued from emerging markets equities – which have now been sold for eight out of the past 12 months – with investors pulling $9.8 billion from the sector.

“The outflows were across the board, in contrast to March, when buying in single country ETPs – particularly those exposed to Asia – offset selling out of broad EM equity products, leading to muted net outflows of $1.1B,” the report stated.

A reversal of sentiment led to led to flows out of China, Brazil and South Korean equity ETPs, while selling out of broad emerging market equity slowed but remained negative at $4.8 billion.

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