Amundi published its ETF flows analysis report, in which it states that Global ETF gained €62.3bn in January with investors favoring fixed income slightly more than equity, gaining €32.4bn and €28.6bn respectively.
The US ETF market collected €41.5bn while the European UCITS ETF attracted €18.5bn of net new assets. The Asian ETF market was slightly positive.
Globally speaking, the top three most popular strategies were all equities − World, emerging markets, and European – with about €5bn inflows each. In contrast, large growth equity witnessed outflows of €5.5bn while ultra-short bonds and the technology equity sector lost €3.2bn and close to €2bn respectively.
While the global flows for January were good rather than exceptional, there was a strong rally for European UCITS equity ETFs with this asset class gaining €9.7bn this month. This is not a record number, but it was a considerable improvement over the end of last year when flows were around €4bn.
This month emerging markets equity was the most popular strategy gaining €4.6bn with a rough split between broad indices and country, gaining €2.1bn and €1.9bn respectively. China was the most popular country gaining €1.7bn, with investors now allocating to this country as covid restrictions have been relaxed. Investors continued the long-run trend of allocating to developed market world indices with these gaining €1.9bn.
Equity ESG continued its positive trend gaining €3.3bn in January. ESG emerging market equity was the most popular strategy adding €1.3bn, equivalent to 28% of the total allocation to this region. This is the most rapid allocation to ESG emerging market equity witnessed in January. Trends in Smart Beta reflected the recent market rallies with income gaining about €0.7bn while minimum volatility lost about €0.6bn.
Investors allocated €8.9bn to European UCITS fixed income ETFs with Investment Grade corporate debt ETFs gaining €4.9bn while government bonds ETFs attracted €2.9bn. High-yield and Aggregate debt gained €900m respectively.
Investors allocating around €5bn to investment-grade corporate debt represent an uptick in the popularity of this asset class in recent months. Investors maintained the trend seen in recent months favoring euro-denominated corporate bonds allocating €3.4bn to this asset class and €0.9bn to dollar-denominated debt.
With concerns over the higher costs of borrowing fading, investors have returned to fixed income and corporate bonds in particular. Whilst in 2022, they started to select short duration, they now seem comfortable with pretty much all maturity bands. Investors have also continued to unwind their inflation positions with further outflows of €600m this month. Investors allocated €2.1bn to ESG fixed-income strategies with Investment Grade corporate gaining €1.4bn, equivalent to 29% of total inflows into this asset class.