Highlights

  • European-domiciled ETF flows remained in positive territory in December. The European ETF market saw $5.9 billion of inflows during the month, after experiencing $14.6 billion of inflows in November.
  • Equity ETFs led the inflows, with $4.2 billion of net new assets in December.
  • Fixed income ETF cash flows were also positive, reaching $2.6 billion in December, down from $8.5 billion the previous month.

 

European-domiciled ETF flows remained in positive territory in December in spite of a sell-off in risk assets during the month. The ETF market saw inflows of $5.9 billion in December, with equity ($4.2 billion) and fixed income ($2.6 billion) products both contributing to overall inflows. Commodities ETFs (-$854 million) detracted from total flows.

For 2022 overall, ETF inflows reached a total of $89.0 billion of net new assets. Equity products proved the most popular with investors, netting $59.3 billion of assets, followed by fixed income ETFs, which took in $39.2 billion of new money. Commodities registered a negative year with -$3.9 billion of net outflows.

Within equities, core strategies were the largest contributor to inflows in December, taking in $1.9 billion of flows. Of this, world ($1.5 billion) and global ($466 million) exposures accounted for the greatest inflows. Core eurozone (-$231 million) and Japan (-$208 million) exposures suffered outflows, however. Smart beta strategies gained $1.3 billion, reversing the outflows seen in November, with United States exposures ($1.1 billion) taking the lion’s share of the inflows. Sustainable ETFs also saw net inflows during the month of $1.1 billion, led by emerging market ($915 million) and world ($588 billion) products, while US sustainable ETFs saw outflows (-$982 million). Sector (-$478 million) and theme1 (-$144 million) exposures experienced outflows during the month. Sector ETF outflows were largely attributable to redemptions from United States (-$389 million) products, while world sector building blocks gained net assets ($156 million). Outflows from theme ETF were mainly driven by redemptions from world (-$29 million) and global (-$87 million) exposures.

In fixed income, total inflows of $2.6 billion were primarily driven by new investments into corporate ($1.4 billion), aggregate ($980 million) and high-yield ($791 million) bond exposures. Within corporate bond ETFs, eurozone ($690 million) and United States ($338 million) strategies were the main drivers of inflows. Aggregate fixed income ETF inflows mainly went into global ($529 million) and emerging market ($253 million) products. High-yield bond ETF demand was mostly for global ($424 million) and eurozone ($276 million) exposures. The largest detractors amongst fixed income ETF segments were sovereign debt ETFs, which suffered -$513 million of redemptions in December. Government bond ETF outflows were driven by investor withdrawals from China (-$508 million), eurozone (-$582 million) and Germany (-$649 million) products. These outflows more than offset demand for United States ($637 million), emerging market ($345 million) and UK ($334 million) government bond ETFs. Floating-rate bond ETFs saw outflows of-$322 million, of which United States exposures accounted for -$294 million.

Commodity ETFs faced redemptions of -$854 million in December, mainly fuelled by outflows from broad (-$332 million), precious metals (-$183 million) and ex-agriculture (-$164 million) commodity exposures.

Vanguard UCITS ETFs

In December, the Vanguard UCITS ETF range captured net inflows of $1.5 billion. Flows were split between Vanguard’s equity UCITS ETF range ($993 million) and fixed income UCITS ETF range ($500 million). For the full year, $9.3 billion of investor flows went into the Vanguard equity UCITS ETF range, while Vanguard fixed income UCITS ETFs gained $2.9 billion of new assets.

Of the $9.3 billion of flows into Vanguard’s equity UCITS ETF range, the Vanguard FTSE All-World UCITS ETF gained $191 million of net new assets, followed by the Vanguard FTSE 250 UCITS ETF ($143 million), the Vanguard Developed Europe UCITS ETF ($137 million), the Vanguard S&P 500 UCITS ETF ($128 million) and the Vanguard FTSE All-World High Dividend Yield UCITS ETF ($111 million).

Flows of $500 million into the Vanguard fixed income UCITS ETF range went primarily into the Vanguard EUR Eurozone Government Bond UCITS ETF ($119 million). The Vanguard USD Corporate Bond UCITS ETF ($104 million), the Vanguard ESG Global Corporate Bond UCITS ETF ($62 million) and the Vanguard USD Corporate 1-3 Year Bond UCITS ETF ($54 million) also contributed to inflows.

 

1 Source: ETFbook, as at 30 December 2022. The ‘theme’ category includes ETFs that invest in investment themes such as energy and environment, infrastructure, health and society, financial evolution and disruptive technology.

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