Liquid Alternatives: In 2019, Globally, and especially in Europe, ETFs Raked It In
The global ETF market drew in inflows of nearly half a trillion euros (€495bn) in 2019.
But European ETFs were a standout, pulling in €104bn of net new assets, and setting a new record, according to data from Amundi Asset Management cited by INVESTMENT WEEK.
“European ETFs attracted record-breaking flows in the calendar year 2019, beating the previous high of €98.5bn in 2019,” said Jose Garcia Zarate, associate director of passive strategies research at Morningstar Europe. “This outstanding result was achieved on the back of a massive surge of flows in the fourth quarter totaling €45.2bn, which was also a new quarterly high for Europe.”
Between equity and fixed income, the breakup of global inflows into ETFs was equities (€251bn) and fixed income €229bn.
In Europe, the split was €55bn and €48bn, respectively, between fixed income and equity.
Month-wise, December stole the show with its intake of € 82 billion. That accounted for nearly 16% of all global inflows into ETFs for 2019 .
Equity ETFs in the UK was the top performer, garnering €7.4bn despite Brexit and political overhangs.
However, some major European countries bled equity outflows in 2019. The five biggest losers were Germany (€ -4.5 million), France (€ -2.6 billion), Spain (€ -692 million), Sweden (€ -274 million) and Italy (€ -270 million).
“Investors seem to be struggling to see the growth potential in Europe,” said Chris Gannatti, head of research, Europe, at WisdomTree.
“Germany is being hit by focus on trade in a negative way as well as ‘de-globalization’ in the political sphere. With the slower growth prospects, many investors have trouble seeing much in the way of return potential in European financials.”
Corporate fixed-income ETFs in Europe did very well, raking in € 13 billion. This amount was thrice as much as that of corporate America which received € 4 billion.
The crown for the largest inflows within government debt ETFs went to emerging markets which pulled in € 7.8 billion.
“There is little question that investors are trying to do what they can to mitigate the fact that many of the more classic government debt and short-term liquid fixed income instruments have negative yields,” said Gannatti. “Emerging market debt has been very popular, and the performance has been very strong.”
Gold shone amongst commodities, with investors bunging in € 125 million.
Globally, there were 7,822 individual ETFs. Europe accounted for 2,418, while the US and Asia had 3,626 and 1,778 ETFs, respectively.
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