Industry Updates

Equity ETFs suffer record high outflows in August

George Geddes

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Europe and US-listed ETFs suffered negative net flows in August of $9.2bn, according to Société Générale’s ETF Market Signals report. This comes on the back of two months of significantly

positive net flows

as June and July had $54.6bn and $48.7bn of inflows, respectively.

It was equity ETFs which were hit the hardest last month, as the asset class endured $30.9bn of outflows, an all-time high. This was mainly driven by emerging market equity ETFs which lost $12.6bn in assets following ongoing trade war tensions between the US and China.

US and European equity ETFs were not let off easily either as they both lost $4.1bn and $5.6bn, respectively.

It appears investors are seeking haven from the volatile equity markets in government bond ETFs, which saw inflows of $6.9bn, and gold-backed ETFs, which saw inflows of $5.4bn.

Like their equity counterparts, emerging market bond ETFs also struggled to hold assets having lost $1.3bn over the period after investors remained optimistic in the region in Q1 2019.

The financials sector has had a very up and down year in terms of performance and is feared to be the most vulnerable to the ongoing geopolitical events. ETFs exposed to the sector saw outflows of $4.1bn in August in tandem with the Lyxor S&P 500 Banks UCITS ETF (BNKU) falling 8.1%. Environmental, Social and Governance (ESG) ETFs however, remained positive on the month having pulled in $2.4bn.

ETF issuers are starting to notice these trends as only 10 ETFs were launched in Europe and the US in August, five of which were exposed to ESG benchmarks and two were on US treasuries.

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