Exchange traded fund investors continued to pile into developed market equities over November but shifted away from Treasury bond funds in anticipation of a possible December rate hike.
“Developed markets equities drive global ETP flows on stronger U.S. growth and ECB stimulus prospects,” according to BlackRock ETP Research.
Specifically, U.S. equity-related ETFs attracted $20.1 billion in net inflows while the other developed market-related ETFs brought in about $6.1 billion. [The Trend That Defined November’s ETF Flows]
Overseas markets, notably in currency-hedged Europe and Japan ETFs, gained traction as investors anticipated diverging central bank policies – the Fed is expected to hike rates in December, whereas the European Central Bank has been implementing loose monetary policies.
“Promises from ECB President Mario Draghi that ‘we will do what we must to raise inflation as quickly a possible,’ had the predictable impact of driving up European stocks while pushing bond yields even deeper into negative territory,” according to BlackRock.
Traders, though, pulled about $900 million from U.S.-listed emerging market ETFs. The slowdown in China weighed on the emerging market group, with China country funds experiencing $2 billion in outflows.
U.S.-listed stock ETFs saw a total of $25.3 billion in inflows over November.