Market up, flows down for U.S. ETF market

A good week for the market, is not too good for the ETP flows. Last week we saw the S&P 500 recording their best weekly run for the year with a 2.7% increase, however Total ETP flows shrank driven by equity outflows.

Total US ETP flows for the last week registered $1.8 bn of outflows vs $2.8 bn outflows the previous week, setting the YTD weekly flows average at +$1.9 bn. US ETPs AUM remained firm above the trillion dollar mark at $1.02 trillion supported by a strong equity market.

Most of the decline in flows came from outflows of EM assets (-$3.4 bn), while US ETPs experienced a step back (-$1 bn), and the global and other developed markets experienced inflows ($1.1 bn). New allocations within EM still favor individual countries over broad regional indices, especially after last week’s asset flight from broad EM benchmarks. YTD EM countries flows sat at around $0.9 bn at the end of last week, while EM broad flows sank to -$6.6 bn. Among sectors, Energy products were ‘on fire’ with $1.3 bn of inflows.

Fixed Income ETP flows started to flatten and lose steam (+$155 mm). Corporates reached an inflexion point in their upward trend (+$318 mm), and Sovereign began to bleed assets (-$347 mm).

Investors are looking beyond precious metals within commodities, total flows into the asset class were positive at $739 mm, distributed generously among sectors (Overall, 27%; Agriculture, 25%; Precious Metals, 24%; Energy, 23%).

New Launch Calendar: LatAm equities and Natural Gas
Last week saw two new products come to market. The new products listed at NYSE Arca, provide investors with new choices to access Latin American equities and Single-exposure commodity returns.

Turnover Review: On Exchange activity dropped by 11%
Total weekly turnover drop by 11% to $311 bn vs. $349 bn in the previous week, and a 7% down from last year’s weekly average. Equity ETPs took the hardest hit with a same-size plunge which drained $32 bn from on exchange trading, mainly driven by Large Cap ETPs (-$22.5 bn). Within Fixed Income products, turnover increased by 11% WoW, and reached a 48% increase from last year’s weekly average, with Sovereign turnover leading the activity (+$1.4 bn WoW; +$4.3 bn from last year average). Finally Commodity ETPs, saw their activity drop by 24% WoW, however on exchange activity remains 30% above 2010’s weekly average.

Assets Under Management (AUM) Review: assets added $17 bn
Fueled by a better-than-average week in the equity markets, and in spite of weekly outflows, overall ETP assets increased by 1.7% from the previous week, adding $17 bn and reaching $1.02 trillion at the endof the week. Year to date US ETPs AUM have increased $25 bn or 2.5%.

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