BlackRock’s FTSE 100 ETF saw the most inflows across all European-listed ETFs last week amid more clarity around Brexit negotiations and bets the UK will recover quickly following the coronavirus vaccine news.
According to data from ETFLogic, the iShares Core FTSE 100 UCITS ETF GBP (CSUKX) saw $428m inflows in the week to 20 November following news three pharmaceutical companies had successfully tested a coronavirus vaccine.
The first came on 9 November when Pfizer’s announcement caused risk assets to jump with the Russell 1000 Value index outperforming the Russell 1000 Growth index by 6% on 10 November, the highest daily excess return over the past decade.
With value sectors such as energy and financials accounting for roughly 28% of the FTSE 100, the inflows could represent a prediction the beleaguered factor is set to outperform for some time.
Christian Mueller-Glissmann, head of asset allocation at Goldman Sachs, said the UK could see a strong recovery as its economy emerges from the coronavirus.
“The UK economy is especially exposed to sectors that have been throttled back by COVID-19 restrictions, and the UK is well-positioned for relatively quick vaccine deployment, so its economy stands to “uncoil” more than others when high-contact sectors can return to normal life,” Mueller-Glissmann added.
Value investors look to catch cyclical rebound through ETFs
Furthermore, UBS has forecasted the FTSE 100 will rise 13% if the UK secures a trade deal with the European Union.
Brexit talks took a turn for the worst earlier today, however, after EU chief negotiator Michel Barnier warned that he will put out of negotiations if the UK does not compromise on outstanding issues.
Time is running out for both parties to agree a deal before the transition period ends with European Commission President Ursula von der Leyen stating the EU is willing to get “creative” in order to reach an agreement.
Mueller-Glissmann forecasted the UK to see a bounce next year as the risk of Brexit clears.
“It appears the UK is getting ready to turn the page on the Brexit process and begin to explore life outside of the EU.”