Global exchange traded products saw November inflows of $15.8 billion, well below the $32.9 billion seen in October. Speculation that the Federal Reserve could taper its quantitative easing program sooner than some market participants would like to see tempered inflows last month.
“US Equity and Broad Developed Markets led asset gathering for the month with $9.9bn and $7.2bn. Funds tracking the S&P 500 and MSCI EAFE indices drove much of the activity. These two categories also account for 81% of global ETP flows year-to-date,” according to a report released Monday by BlackRock (NYSE: BLK), parent company of iShares, the world’s largest ETF issuer.
Core exposures, primarily U.S. large caps, took in $8.7 billion, but small-caps saw outflows of $2.4 billion, according to BlackRock data. Sector ETFs pulled in $3.4 billion in November with investors favoring industrial, health care, energy and consumer cyclical ETFs.
Confirming that inflows to health care and industrial sector funds have recently been robust, the Health Care Select Sector SPDR (NYSEArca: XLV) and the Industrial Select Sector SPDR (NYSEArca: XLI) are now the third- and fourth-largest sector ETFs, respectively, forcing the Energy Select Sector SPDR (NYSEArca: XLE) into the fifth spot. [Health Care SPDR now Third-Largest Sector ETF]
Short maturity bond ETFs gained $1.9 billion last month, but overall, bond ETFs shed $1 billion in assets.
“The most popular Fixed Income ETPs in November were Broad Aggregate US funds, counter to the trend most of the year. Investment Grade Corporate continued to see outflows while High Yield Corporate attracted $0.5bn, mostly from Short Maturity funds. Riskier Fixed Income ETP segments such as Emerging Markets debt were out of favor. Notably, Emerging Markets debt has modest year-to-date inflows but splitting out local currency ETPs changes the picture as these funds have attracted $3.4bn,” said BlackRock. [ETF Inflows Surge Despite Government Antics]
Some investors have been underweight Europe, but compelling valuations and improving economic data are helping change that situation as investors embrace Europe ETFs. Pan European flows maintained momentum gathering $3.5bn although the pace slowed from the record setting totals witnessed in the prior three months. Year-to-date the category has gathered $24.0bn in contrast to outflows of ($6.5bn) from German ETPs, said BlackRock. [Attractive Valuations Lurk Among Europe ETFs]
“The pickup in Pan-European flows this year has by-and-large not spread to single country exposures, which saw outflows of ($1.0bn) in November. Country funds have year-to-date outflows of ($1.6bn) as some of the money attracted to German Equities in recent years has reversed – ($6.5bn) thus far in 2013. This has been partially offset by strong inflows into UK Equity funds,” noted BlackRock..
The WisdomTree Japan Hedged Equity Fund (NYSEArca: DXJ) remained this year’s top asset-gathering ETF at the end of November with 2013 inflows of almost $9.1 billion while the SPDR Gold Shares (NYSEArca: GLD) was the worst offender on the outflows front with $23.2 billion in outflows.
“Currently the high risk group in US equities includes Small Cap Equities and ETPs that track Gold Miners,” according to the BlackRock Risk Sentiment Measure.
Global Equity ETP YTD Flows by Exposure
Chart Courtesy: BlackRock. ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of DXJ and GLD.