European ETF market review: August

07 September 2021 | Markets and Economy

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August 2021

Highlights

  • European-domiciled ETFs recorded their seventeenth straight month of inflows in August1, with $11.6 billion coming into the market.
  • Equity ETFs saw an uptick, taking in $7.6 billion of new fund assets over the month, compared with $5.9 billion in July. This brings the asset class closer to a net $100 billion of inflows year-to-date.
  • Fixed income ETFs saw a significant reduction in flows this month, only adding $3.5 billion in August.

European-domiciled ETFs saw reduced inflows for a second consecutive month, attracting $11.6 billion in August after taking in $17.4 and $13.8 billion in June and July, respectively. This month, equity exposures took the majority of market inflows ($7.6 billion), a substantial increase from July, while fixed income ETFs slowed down to $3.5 billion. Commodity ETFs stayed muted with net outflows of $0.1 billion. 

Within equities, sustainable ETF strategies kept the lead in August, with $4.3 billion of inflows, led by US exposures ($1.4 billion), followed by world ($1.1 billion), emerging market ($0.8 billion) and European ($0.7 billion) exposures. Similar to July, core equity ETFs garnered $4 billion in inflows, mainly through US ($2.6 billion) and world ($1.6 billion) exposures. German equities saw modest outflows of $0.3 billion over the month. Smart Beta exposures also saw moderate outflows in August, losing $0.5 billion, with inflows into world exposures ($0.4 billion) offset by divestment from the US (-$0.6 billion).

In fixed income, corporate bond and high yield ETFs dominated the league table, respectively contributing $1.4 and $1.2 billion to total inflows into the asset class ($3.5 billion). Eurozone exposures ($0.9 billion) saw significant investor demand within corporate bonds, while high yield remained primarily driven by US issuers ($0.8 billion). Government bond exposures closed August with $0.7 billion added across global ($0.4 billion), China ($0.3 billion), US ($0.3 billion) and the eurozone ($0.3 billion), contrasted with net outflows from emerging markets (--$0.8 billion). Inflation-linked bonds saw moderate net inflows ($0.2 billion), where the eurozone ($0.3 billion) was the major contributor.

In commodities, flows remained muted (-$78 million), with inflows in ex-agriculture products ($153 million) being largely offset by outflows from broad exposures (-$254 million).

Vanguard UCITS ETFs

The Vanguard UCITS range captured net inflows of approximately $1.1 billion. Inflows into the equity range ($0.9 billion) outpaced client flows into fixed income ($0.2 billion). This month again equity ETF flows were primarily driven by the Vanguard S&P500 UCITS ETF ($0.4 billion) and Vanguard FTSE All-World UCITS ETF ($0.3 billion). The Vanguard FTSE 250 UCITS ETF (-$43 million) saw a significant slowdown in the pace of outflows. In fixed income, inflows into the Vanguard USD Treasury UCITS ETF ($108 million) and Vanguard USD Emerging Markets Government Bond UCITS ETF ($40 million) were major contributors to the overall flow pattern, while the Vanguard US Treasury 0-1 Year Bond UCITS ETF ($24 million) is steadily growing to approach $250 million of overall assets under management.

 

1Source: Vanguard, ETFbook, as at 31 August 2021. Data extracted on 2 September 2021.

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