Uncertainty in the markets persisted over the second quarter of 2022 as ETFs across the board felt outflows with hiding places few and far between.
The S&P 500 booked a 16.3% fall in Q2 taking the index into bear market territory for the year as persistent inflation continued to put pressure on rising interest rates.
The impact of rising inflation was also felt in the bond market, with 10-year US Treasury yields at 2.9%, overtaking Chinese sovereign yields for the first time in 12 years.
As a result, one ETF dominated the outflows charts over the quarter as the China bond rout picked up speed.
Investors continued to take their money out of China bond ETFs following a spike in US yields, reversing the advantage they previously held over their US equivalents.
The iShares China CNY Bond UCITS ETF (CNYB) recorded outflows of $5.1bn in the three months to the end of June, according to data from Bloomberg Intelligence.
It means CNYB assets under management (AUM) has more than halved year-to-date, falling from $13.6bn in January to just over $6bn, as at 14 July.
The challenging environment for fixed income was felt across the board, with PIMCO’s flagship European product, the PIMCO US Dollar Short Maturity UCITS ETF (MINT), recording almost $1.3bn outflows over the three months.
The Lyxor EUR 2-10Y Inflation Expectations UCITS ETF (INFL) also recorded outflows of $663m amid predictions inflation has reached a peak.
Meanwhile, the iShares € High Yield Corp Bond UCITS ETF (IHYG) saw outflows of $598m while the iShares Core € Corp Bond UCITS ETF (IEAC) recorded an asset exodus of $449m as investors derisked the fixed income portion of their portfolios.
Elsewhere, several US equity ETFs suffered outflows as the market sell-off caught hold in Q2.
The Lyxor S&P 500 UCITS ETF (SP5) led the way with outflows of $1bn, followed by the Invesco S&P 500 UCITS ETF (SPXS) with net redemptions of $759m and the Xtrackers S&P 500 Equal Weight UCITS ETF (XDEW) which posted outflows of $410m.
Three Amundi US equity products also saw similar outflows, the Amundi MSCI USA UCITS ETF (CU2), the Amundi Index MSCI USA SRI PAB UCITS ETF (USRI) and the Amundi MSCI USA ESG Leaders Select UCITS ETF (SADU), recorded $491m, $472m and $470m outflows, respectively.
There were also signs investors were taking profits from some of the few successful sector plays so far this year. The UBS ETF CMCI Composite SF UCITS ETF (CCUSAS), which invests in commodities, recorded outflows of $463m over the quarter.
The ETF, which tracks the UBS Bloomberg Constant Maturity Commodity index, had returned 29.5% from the start of the year until 8 June but has since fallen to 9.6% so far this year, as at 15 July.
In a similar vein, the Xtrackers MSCI World Energy UCITS ETF (XDW0) saw $761m outflows over Q2 after its returns peaked at 47.6% in June but has now only returned 12.3% year-to-date.
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