Industry Updates

Currency-hedged bond ETFs see inflows following strong euro and pound

George Geddes


Fixed income ETFs was the only asset class in Europe to post positive net flows last week as equity, commodities and alternative ETFs all saw outflows.

In the week the UK government rejected Theresa May's second Brexit deal, investors have made an apparent shift in risk exposure. According to data from Ultumus, European fixed income ETFs' net flows neared $1.5bn last week. Despite inflows in excess of £4.2bn, net flows for European equity ETFs were -$65m. Commodity and alternative ETFs saw net flows of -$142m and -$30m, respectively.

Across the pond, the US market saw large volumes of capital pouring in to all asset classes. Equity and fixed income ETFs had inflows of $27bn and $6bn, respectively, with alternative ETFs also seeing respectable inflows of $250m.

Looking more specifically at which European ETFs were drawing investors' attention, a number of currency-hedged government and treasury bond ETFs by iShares have seen their assets under management balloon in the last seven days. Both the euro and sterling have rallied as a result of the government's recent votes on Brexit, which could have resulted in the sudden flood in to the ETFs.

ETFAUM FlowAUM ChangeiShares $ Treasury Bond 7-10yr UCITS ETF EUR Hedged (IBB1)$570,0195053.75%iShares $ Treasury Bond 3-7yr UCITS ETF EUR Hedged (CBUE)$453,1244023.63%iShares Germany Govt Bond UCITS ETF USD Hedged (DEEH)$264,8462499.98%iShares $ Short Duration Corp Bond UCITS ETF MXN Hedged (SDMXX)$11,714,718861.93%iShares $ Treasury Bond 0-1yr UCITS ETF - USD (IBTU)$2,207,181479.26%iShares $ Treasury Bond 1-3yr UCITS ETF - MXN Hedged (IBTMXX)$54,215,441410.60%

While majority of the funds were small in terms of initial AUM, SDMXX and IBTMXX were the standouts growing from $1.4m to $13.1m and $16.1 to $70.6m, respectively.


All data provided by Ultumus


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