Investors took a relatively sanguine view on the long-term market impact of the coronavirus turmoil with fixed income ETFs accounting for much of the ecosystem’s outflows in 2020.
With markets starting to show signs of recovery from the pandemic in April, investors were keen to increase their risk exposure.
As a result, the three ETFs with the largest outflows in Europe were from the fixed income segment of the market while a Japan ETF and gold ETC made up the top five, according to data from ETFLogic.
iShares Core € Corp Bond UCITS ETF (IEAC)
Topping the list is BlackRock’s iShares Core € Corp Bond UCITS ETF (IEAC) which lost $4.2bn assets for the year.
A significant volume of assets was pulled from IEAC in November when there was another spike in infection rates across Europe.
Investors rotated away from the ETF as well as several other euro corporate bond ETFs and into equities towards the end of the year following successful coronavirus vaccine tests.
iShares J.P. Morgan EM Local Govt Bond UCITS ETF (SEML)
Behind IEAC was BlackRock’s $6.3bn iShares J.P. Morgan EM Local Govt Bond UCITS ETF (SEML) with $2.5bn outflows.
SEML lost nearly a third of its assets as much of the emerging markets were stung by the global lockdowns which saw exports dwindle and revenues collapse.
China and South Korea have issued negative yielding government bonds which could be the start of what is to come for the rest of the market.
iShares $ Treasury Bond 1-3yr UCITS ETF (IBTS)
Third in the list is another BlackRock fixed income ETF offering exposure to short duration US government bonds.
The iShares $ Treasury Bond 1-3yr UCITS ETF (IBTS) saw $1.8bn outflows last year, most likely due to a similar reasoning as for IEAC.
Investors were simply in risk-on mode as markets showed signs of recovery especially in the US and with a large section of developed market government bonds negative yielding, there were more attractive areas to deploy their assets.
iShares Core MSCI Japan IMI UCITS ETF (SJPA)
The only equity ETF to feature in the list is the iShares Core MSCI Japan IMI UCITS ETF (SJPA).
SJPA lost $1.7bn net assets despite offering over 11% in returns for the year. One factor for this loss of assets is the reallocation to sustainable Japan ETFs which recorded significant inflows last year.
It has, however, seen $230m inflows in December which suggests investors believe the global recovery period could be favourable for Japanese stocks, especially as they are being undervalued.
WisdomTree Physical Gold ETC (PHGP)
Finally, the $7.4bn WisdomTree Physical Gold ETC (PHGP) featured in the list despite two gold ETCs appearing in the largest inflows for 2020.
PHGP saw $1.5bn outflows amid numerous competitors cutting product fees as well as launching competitive products.
WisdomTree also expanded its gold offering last year with the launch of a responsibly sourced gold ETC.
To find out which five ETFs saw the most inflows, click here.