The month of May saw the S&P 500 fall 5.9% as a result of President Donald Trump’s trade war with China. Through this decline, equity ETFs with exposure to North America and domiciled in the US had outflows of nearly €5bn. This contributed to the asset class’s net flows with exposure across all regions being - €17.6bn. Sector and smart beta ETFs were the biggest losers with €8.8bn being pulled by investors.
European investors did not share the same strategy as North American equity ETFs received €800m in new cash as well as sector and smart beta ETFs receiving €1.7bn.
When investors cash out of their equity ETFs, they usually seek a safe haven to store the cash until the market volatility subsides. This time round, it was fixed income ETFs which were the asset class of choice over commodity ETPs.
Across European, US and Asian domiciled ETFs, fixed income products saw net flows of €11.5bn whereas commodity ETFs lost €1.0bn. Fixed income ETFs’ positive month was driven by the US and Asia which poured in €6.7bn and €4.0bn, respectively.
The total net flow across all regions and asset classes was €8.4bn which slightly reduces the year-to-date figure of €114.5bn. YTD inflows for fixed income ETFs is starting to pull away from equity inflow after last month performance as the figures are now €76.3bn and €39.9bn, respectively. Net flow for commodity ETFs remains in the red with -€4.2bn so far this year.