The decade-long bull run may have come to a crashing halt when October’s volatility hit, but it served as a reminder to investors that alternative strategies like overseas investing are an option as inflows into exchange-traded products (ETPs) increased in October while they slowed in domestic ETPs, according to a BlackRock report.
Based on the report data, investors were quick to flee overseas amid October’s mass of sell-offs with global ETPs seeing specific concentrations in Japan and emerging markets. Japan equities saw $12.8 billion, while emerging markets took in $10.7 billion–$7.4 billion of that into Chinese equities.
The report credits Japan’s influx of capital to a combination of political stability as well as solid corporate earnings.
Despite the slowdown in inflows to domestic ETPs, the report noted that year-to-date inflows are still robust.
“U.S. Equity inflows slowed to $4.3bn amid rising interest rates and equity market valuation declines, but year-to-date flows remain strong at $124.5bn bolstered by solid corporate earnings and strong economic growth,” the report stated. “Flows in October were driven by Large Cap with $9.8bn offset by Financials and Real Estate sector funds with ($2.5bn) and ($2.4bn) respectively.”
Other notable highlights in the report showed that fixed Income flows were mixed as a result of rising interest rates and languishing U.S. equities. However, U.S. Treasury fund flows amassed $5.2 billion, while outflows of $2.4 billion resulted in high yield and $2.7 billion from multi-sector bond funds.