July continues to see significant inflows into the ETF market

Deborah Fuhr Welcome to ETF TV, I’m Deborah Fuhr. Today we will be discussing the trends that we’ve seen in the global ETF and ETP industry as of the end of July.

Deborah Fuhr So we’ve seen significant inflows and growth in assets. So ETFs globally are at a new record of 6.6 trillion US dollars. The net inflows for the month were 79 billion, which is the third highest on record, so a very strong month. When we look at year to date flows, we’re at 373 billion, which compared to last year at this point, we were at 270 billion, so we’re having a very good year for ETFs. When we look at where the money is going, we saw that fixed income ETFs have taken in 35 billion of net new assets during the month. Equity ETFs put in 24 billion and commodities 10.

If we dissect some of these numbers, some of the interesting trends on year to date basis would be, if we were to look at the investments in gold, primarily due to the fact that it’s a safe haven and people are concerned about if we will see inflation due to all the stimulus that’s been put into the market. So we see that there’s 48 billion dollars of net inflows into gold, which puts the gold holdings in ETFs and ETPs above the amount of gold held by Germany at the central bank. So a very significant amount of gold backing ETFs and ETPs. When we look at some of the other trends we’ve seen that the flows going into smart data have actually been net outflows, so we’re seeing investors not, for the past few months, putting money into smart. I think some of that is driven by the fact that there’s concern about, will they actually get income from dividend ETFs, given the reduction in dividends being paid out, or announcements from companies. Where we have seen flows is with ESG, it’s really something where we’re seeing new product launches and we’re also seeing investors investing in ETFs that take E, S and or G into account. And that’s a trend that we’re seeing globally. But it is still true that the majority of assets, products and investors for ESG want to sit in Europe.

We’re also seeing as we’re in active ETFs after the US has approved non-transparent and semi-transparent ETFs, so that’s an interesting space to watch as American Century, Fidelity, and T. Rowe Price are putting out new products into the market. So I think we’re going to be watching what type of investors are using these products, and how they look at them compared to mutual funds. We’ve also been seeing interesting flows into currency hedge products are picking up, and we’ve seen net inflows going into emerging markets as well as into China. So I think we’ve seen an interesting month, and year to date you can see that right now the US is at a record level of assets, Europe is at a record level of assets, as is Canada. So the global picture is represented quite nicely within a number of the regional or countries where we’ve had significant growth in the use of ETFs.

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Published on August 25, 2020