August 2024 was another month with strong estimated net inflows (+€19.9 bn) for the European ETF industry. These flows were way above the rolling 12-month average (€17.0 bn) 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 €180.0 bn and €210.0 bn for the year 2024 overall.
The inflows for August were driven by equity ETFs (+€14.6 bn), followed by money market ETFs (+€3.4 bn), bond ETFs (+€1.9 bn), commodities ETFs (+€0.2 bn), and mixed-assets ETFs (+€0.03 bn), while alternatives ETFs (-€0.2 bn) faced estimated net outflows.
Graph 1: Ten Best- and Worst Lipper Global Classifications by Estimated Net Sales, August 2024 (Euro Billions)
Source: LSEG Lipper
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 U.S. (+€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 (+€2.0 bn) and Money Market EUR (+€1.4 bn) 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 normalize and expectations of the investors that the U.S. 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 U.S. were linked to all kind of versions of the S&P 500 (market cap weighted, ESG-related, equal weighted, etc.). Even more interesting, it seems like European investors are still buying into Equity Sector Information Technology (+€0.6 bn) 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 (+€1.3 bn), Bond USD Corporates (+€1.1 bn), and Bond Global Corporates USD (+€0.3 bn), 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 (+€0.6 bn), Bond EMU Government Short Term (+€0.4 bn), and Bond EUR High Yield (+€0.2 bn).
On the other side of the table, Bond USD Government (-€0.8 bn), Bond USD Inflation Linked (-€0.8 bn), Bond Emerging Markets Global in Local Currencies (-€0.5 bn), and Bond EUR Corporates (-€0.4 bn) faced the highest outflows from all Lipper classifications.
Regarding the overall estimated fund flows in the bond segment, it looks like European investors are preparing their portfolios for the normalization 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 (-€0.3 bn) as the revenues from banks might get hit by lower interest rates.
The full report on the fund flows in the European ETF industry over the course of August 2024 can be found here: https://lipperalpha.refinitiv.com/reports/2024/09/friday-facts-european-etf-industry-review-august-2024/
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.
