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.
In the fixed-income space, ETF investors pulled out of Treasury bond funds to the tune of $4.4 billion, followed by about $600 million from high-yield corporate debt-related funds, in anticipation of the start to interest rate normalization. Nevertheless, ETFs that track investment-grade corporate debt, municipal bonds and broad aggregate bond indices helped pare some of the outflows.
U.S.-listed bond ETFs saw about $300 million in outflows for the month. [November’s Treasury ETF Dump Sparks Concern]
Meanwhile, traders may have been trying to time a market bottom in the oil commodities space, throwing $1.6 billion into energy-related ETFs. However, investors also yanked $1.4 billion out of gold-related ETFs ahead of the potential December rate hike.
All-in-all, U.S.-listed exchange traded products attracted $26 billion in net inflows as of the end of November. The U.S. ETF universe has expanded by $194.9 billion year-to-date and held close to $2.15 trillion in assets under management.
Looking across the globe, global-listed ETPs attracted $28.2 billion in inflows over November and $302.4 billion year-to-date for a total of $2.98 trillion in assets under management.
For more information on the ETF market, visit our ETF performance reports category.
Max Chen contributed to this article.