Even with significant support for Scotland’s independence ahead of next week’s referendum, investors have not been departing U.S.-listed U.K. equity exchange traded funds.
The emphasis, however, is on U.S.-listed U.K. ETFs because in the wake of growing support for Scotland’s independence, investors are pulling cash from U.K. equity funds.
“Funds that invest purely in U.K. equities experienced 27 days of outflows from July 1 to Sept. 8, equivalent to $1.97 billion, versus 23 days of inflows,” reports Sarah Jones for Bloomberg, citing EPFR Global data.
While investors have been departing equity funds trading in the U.K. ahead of the Scottish independence vote, equivalent ETFs in the U.S. have actually taken in new cash. Since the start of the third quarter, the iShares MSCI United Kingdom ETF’s (NYSEArca: EWU) has added nearly $31 million in new assets. [Scot Vote Pressures U.K. ETFs]
EWU had over $4 billion in assets at the start of the current quarter, so $31 million in new assets does not sound like much, but the number is impressive when considering the headwinds presented by the Scottish referendum and the recent ruling by U.S. District Judge Carl Barbier that BP (NYSE: BP) faces as much as $18 billion in civil penalties for its role in 2010 Gulf of Mexico oil spill. BP is EWU’s third-largest holding at a weight of almost 5%. [BP Weighs on Energy ETFs]
One U.S.-listed U.K.-focused ETF that has seen investors depart in the third quarter is the CurrencyShares British Pound Sterling Trust (NYSEArca: FXB). The pound, once one of this year’s top-performing developed market currencies, has been plagued not only by speculation of Scottish independence, but the soaring U.S. dollar and talk the Bank of England will not move to raise interest rates as rapidly as some currency traders previously expected. [Pound ETFs Get Pounded]