Global exchange traded products just had their best January flows on record and their best monthly flows since 2008.
The global ETP industry, which includes both exchange traded funds and exchange traded notes, attracted $61.2 billion in inflows over January, the best monthly flows since September 2008 and a record for the first month of the year, as optimism over U.S. markets and Japanese equities helped fuel the risk-on atmosphere, according to a BlackRock research note.
U.S. equities added $19.3 billion as global reflationary trends strengthened cyclical exposures, including $4.3 billion flowing into small-caps and $4.1 billion into mid-caps. Additionally, cyclical themes also attracted heavy inflows, with $1.5 billion in real estate, $1.4 billion in technology and $1.3 billion in financial equity sector funds. Value continued to gain momentum as investors funneled $3.9 billion into value funds.
“Value stocks trade at lower prices relative to their fundamentals and have historically outperformed during periods of economic reflation,” according to BlackRock.
Japanese equities also saw a record $10.7 billion in monthly inflows due to the depreciating yen currency, rising inflation and improved earnings expectations. The export-heavy economy is seen as more competitive in a weak JPY environment, and the economy is finally showing signs of inflation.
Broad emerging market equity ETPs gathered $2.5 billion as a more measured U.S. dollar and rise in global reflation helped push investors toward these riskier segments.
Meanwhile, fixed-income ETPs also experienced $16.6 billion in inflows, notably in shorter maturities and investment-grade corporate debt.
“Although expectations are mounting for further rate increases, the array of options in fixed income ETPs has meant that flows remain resilient at the start of 2017,” according to BlackRock.
There were 6,089 globally listed ETPs with $3.632 trillion in net assets under management as of the end of January 2017.
Investors threw $42.2 billion into U.S.-listed ETPs, with $29.1 billion going into equity-related ETPs.
For more information on the ETF industry, visit our ETF performance reports category.