August 2024 was another month with strong estimated net inflows of €19.9bn for the European ETF industry.
These flows were considerably above the rolling 12-month average of €17bn and confirmed the strong fund flows trend for the European ETF industry, which may lead to a new all-time high for estimated net inflows. If the current trend continues, the European ETF industry can expect estimated net inflows between €180bn and €210bn for the year 2024 overall.
The inflows for August were driven by equity ETFs at €14.6bn, followed by money market ETFs €3.4bn, bond ETFs at €1.9bn, commodities ETFs €200m and mixed-assets ETFs €30m, while alternatives ETFs saw €200m outflows.
A view of the top of the league table of the best-selling Lipper classifications shows a recurring picture as ETFs classified as Equity Global (€5.4 bn) and Equity US (€4.2 bn) led the table of the best-selling classifications by a wide margin.
In line with this, the trend toward money market products continued, as Money Market USD (€2.0bn) and Money Market EUR (€1.4bn) were listed at positions three and five on the table of the best-selling Lipper classifications.
This is somewhat surprising given the fact that yield curves have started to normalise and expectations of the investors that the US Federal Reserve, as well as the European Central Bank (ECB), will decrease their respective interest rates. In addition, it is noteworthy that money market products play normally only a minor role in the European ETF industry.
While inflows into Equity Global are driven by inflows into ETFs linked to the MSCI World Index, the inflows into Equity US were linked to several iterations of the S&P 500.
Even more interesting, it appears European investors are still buying into Equity Sector Information Technology (€0.6bn) despite some fears about the current valuations of the underlying stocks and the future growth of some of the leading companies in this sector.
Nevertheless, the more interesting flow trends can be found in the segment of bond ETFs. European investors increased their positions in Bond EUR Corporates (€1.3bn), Bond USD Corporates (€1.1bn) and Bond Global Corporates USD (€0.3bn), as a possible forward-looking strategy for further decreasing interest rates in Europe and the U.S.
In addition, European investors also bought into Bond Global USD (€0.6bn), Bond EMU Government Short Term (€0.4bn), and Bond EUR High Yield (€0.2bn).
Conversely, Bond USD Government (-€0.8bn), Bond USD Inflation Linked (-€0.8bn), Bond Emerging Markets Global in Local Currencies (-€0.5bn) and Bond EUR Corporates (-€0.4bn) faced the highest outflows from all Lipper classifications.
Regarding the overall estimated fund flows in the bond segment, it seems European investors are preparing their portfolios for the normalisation of the inverted yield curves and further falling interest rates in the major economies around the globe.
This assumption might also be backed by the outflows from ETFs in the Equity Sector Financials classification (-€0.3bn) as the revenues from banks might get hit by lower interest rates.
Detlef Glow is head of Lipper EMEA research at Refinitiv.
This article is for information purposes only and does not constitute any investment advice.
The views expressed are the views of the author, not necessarily those of Refinitiv Lipper or LSEG.
