European Region ETFs See Their Coffers Shrink in 2016

After seven consecutive years of annual net inflows exchange-traded funds (ETFs) in Thomson Reuters Lipper’s European Region Funds classification have experienced significant net outflows for year to date 2016. The group has seen $8.8 billion leave this year after taking in almost $53 billion of net new money for the seven previous years combined.

This ETF group has suffered net outflows for the last 15 weeks and for 17 of the 19 weeks so far in 2016. European region mutual funds have also seen money leave their coffers this year, but not to the extent the ETFs side has. European region mutual funds have suffered 11 consecutive weekly net outflows, but their total negative flows are just $700 million, or 3% of the total assets under management of the group as of the end of 2015. On the other hand, the $8.8-billion net outflows from the ETFs represents 14% of the 2015 year-end assets.

The two largest European region ETFs have contributed the largest net outflows this year. WisdomTree Europe Hedged Equity Fund (HEDJ, $13.2 billion AUM) and iShares MSCI Eurozone ETF (EZU, $12.1 billion AUM) have seen $3.2 billion and $2.2 billion leave, respectively. The largest net outflow from a single-country product belongs to iShares MSCI Germany ETF (EWG), which has had negative flows of $1.2 billion. EWG is the fourth largest ETF in the category ($4.7 billion AUM), and its outflows are the third highest for the period. The negative sentiment is widespread throughout the European region ETF universe. Although the above three products account for the majority of the total net outflows, over 63% of the products in the category also have experienced negative flows for 2016. What interest there is in the group has been somewhat muted; 27 products account for just over $380 million of net inflows this year, with the largest (+$53.9 million) belonging to iShares MSCI Netherlands ETF (EWN).