European ETF market review: October

10 November 2021 | Markets and Economy

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October 2021

Highlights

  • European-domiciled ETFs saw their nineteenth consecutive month of inflows, recording $12.4 billion of new fund assets in October1.
  • Equity ETFs saw an uptick over the month, with $11.3 billion of net cash flows, compared with $9.6 billion in September.
  • Fixed income ETFs gained $0.7 billion in assets over the month, down from the $5.5 billion garnered in September.

European-domiciled ETFs inflows saw a slowdown in October ($12.4 billion) relative to the previous month ($15.3 billion). Equity ETF exposures again took largest share of market inflows ($11.3 billion) while fixed income ETF inflows reduced pace to $0.7 billion for the month, after attracting $5.5 billion in September. Commodity ETFs experienced inflows of $70 million.

Within equities, sustainable ETF exposures led the inflows, taking in $5.8 billion for the month, followed by core equity ETF strategies ($3.1 billion). Sustainable ETF flows mainly went into US ($ 1.7 billion) and world ($1.6 billion) exposures, while Japan ($0.6 billion), Europe ($0.6 billion) and emerging markets ($0.5 billion) sustainable equity ETFs also benefitted from inflows. Core equity ETF inflows were dominated by US exposures ($1.2 billion), with all-world ($0.6 billion) and world ($0.6 billion) ETFs also receiving inflows, while eurozone core equity ETFs suffered outflows (-$0.5 billion). Outflows from market-capitalisation segment ETFs (-$0.7 billion) were primarily driven by negative flows from UK exposures (-$0.6 billion).

In fixed income, inflation-linked and floating-rate bond ETFs dominated the inflows, contributing $0.6 billion and $0.2 billion respectively to the asset class’s total inflows ($0.7 billion). Within inflation-linked ETFs, the eurozone exposures led the inflows ($0.5 billion), followed by US strategies ($0.2 billion). Within floating-rate bond ETFs, inflows were led by US exposures ($172 million). Corporate bond ETF exposures saw net outflows of $0.4 billion for the month, as outflows from eurozone corporate bond ETFs (-$0.6 billion) were offset in part by inflows into Russia ($57 million) and UK ($51 million) exposures.

Commodities ETFs experienced modest inflows ($70 million) in October after suffering negative flows of -$44 million the previous month. Commodity ETF Inflows went largely into ex-energy ($58 million) and precious metals ($42 million) exposures, while there were outflows from broad commodity exposures (-$93 million).

Vanguard UCITS ETFs

The Vanguard UCITS range captured net inflows of approximately $0.9 billion in October, primarily driven by inflows into the equity range ($0.7 billion). This month equity ETF inflows mainly went into the Vanguard S&P 500 UCITS ETF ($0.2 billion) and the Vanguard Developed Europe ex UK UCITS ETF ($0.1 billion), while the Vanguard FTSE 250 UCITS ETF (-$0.2 billion) saw outflows. In fixed income, the Vanguard EUR Eurozone Government Bond UCITS ETF ($79 million) was the largest contributor to the total inflows into the asset class ($0.1 billion).

The Vanguard LifeStrategy UCITS ETF range continued to see investor demand, benefitting from $40 million of total inflows in October.

 

1 Source: Vanguard, ETFbook, as at 29 October 2021. Data extracted on 3 November 2021.

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