ETF market review: Inflows maintain momentum in April

09 May 2023
Market commentary, Portfolio construction

Highlights

  • European-domiciled ETF flows remained in positive territory in April, registering $15.5 billion of inflows for the month.
  • Equity ETFs recorded $8.3 billion of inflows, while fixed income products garnered $7.2 billion in net new assets.
  • Commodities ($38 million) and alternatives ($13 million) ETFs also saw positive flows in April.

 

European-domiciled ETF flows maintained their positive momentum in April, reflecting an uptick in risk assets during the period. European-domiciled ETFs registered $15.5 billion of inflows for the month, after garnering $15.3 billion of positive flows the previous month1. Equity ($8.3 billion) and fixed income ($7.2 billion) products accounted for the large part of net new assets, while commodities ($38 million) and alternatives ($13 million) ETFs also saw positive flows.

Within equities, core strategies remained the largest contributor to inflows in April, taking in $5.1 billion. Inflows into core equity products were concentrated in world exposures ($4.9 billion), while United States (-$711 million) and Switzerland (-$305 million) core products experienced outflows. Sustainable ETF exposures were again the second most-popular category, with $2.8 billion of total inflows; here, new investments into world ($1.0 billion), Japan ($626 million) and emerging market ($519 million) sustainable exposures were the biggest contributors to total flows, while Europe (-$159 million) and UK (-$101 million) sustainable vehicles detracted from flows. Sector ETFs also saw investor demand in April, attracting $913 million in flows across markets, with United States exposures ($767 million) the leading contributor. Global sector exposures, however, saw $57 million of outflows during the month. In spite of the overall inflows into European ETFs during the month, smart beta strategies bucked the trend, with -$482 million of net outflows in April, which were mainly driven by redemptions from Europe (-$260 million) and world (-$169 million) products.

In fixed income, total inflows of $7.2 billion were primarily driven by new assets coming into government ($3.3 billion) and corporate ($2.7 billion) bond strategies, while inflation-linked (-$246 million) and floating-rate (-$168 million) fixed income exposures both saw outflows. Within government bond ETFs, United States ($2.0 billion) and eurozone ($697 million) exposures led the inflows. Within corporate bond ETFs, too, eurozone and United States exposures were the main drivers of inflows, with $2.4 billion and $399 million of net new assets, respectively. United States exposures were the largest driver of outflows from both the inflation-linked and floating-rate bond categories, with outflows of -$254 million and -$116 million, respectively. 

Commodity ETFs saw net inflows of $38 million, mainly fuelled by inflows into broad commodity exposures ($190 million), which were offset in part by net outflows from precious metals ETFs (-$128 million). 

Vanguard UCITS ETFs

In April, the Vanguard UCITS ETF range captured net inflows of $1.6 billion, as the majority of Vanguard UCITS ETFs recorded positive flows. Flows were split between Vanguard’s fixed income UCITS ETF range ($804 million) and equity UCITS ETF range ($769 million).

In equities, inflows were led by the Vanguard S&P 500 UCITS ETF ($287 million) followed by the Vanguard FTSE All-World UCITS ETF ($195 million) and the Vanguard FTSE Developed World UCITS ETF ($103 million).

In fixed income, the primary drivers of inflows were the Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF ($314 million), followed by the Vanguard USD Treasury Bond UCITS ETF ($130 million). In the ESG category, Vanguard’s ESG UCITS ETF range recorded inflows of $30 million over the month, primarily driven by flows into the Vanguard ESG Global Corporate Bond UCITS ETF ($13 million).


1 Source: ETFbook, as at 28 April 2023.

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