July 2024 was another successful month for the European ETF industry since ETFs registered for sales in Europe enjoyed strong estimated net inflows (+€20.9 bn) over the course of the month. These flows were way above the rolling 12-month average (€16.2 bn), which might be seen as a sign of strength of the trend toward ETFs in Europe. If the European ETF can maintain the current level of inflows, the overall inflows for the year 2024 will reach a new all-time high with estimated net inflows between €180.0 bn and €210.0 bn.
The inflows for July were driven by equity ETFs (+€11.2 bn), followed by bond ETFs (+€6.9 bn), money market ETFs (+€2.9 bn), alternatives ETFs (+€0.3 bn), and mixed-assets ETFs (+€0.1 bn), while commodities ETFs (-€0.5 bn) faced estimated net 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 U.S. (+€4.6 bn) and Equity Global (+€3.8 bn) led the table of the best-selling classifications by a wide margin. Conversely, it was a bit surprising to see Money Market USD (+€1.6 bn) and Money Market EUR (+€1.3 bn) in positions three and five, respectively, on the table of the best-selling Lipper classifications since money market products play normally only a minor role in the European ETF industry.
Graph 1: Ten Best- and Worst-Lipper Global Classifications by Estimated Net Sales, July 2024 (Euro Millions)
Source: LSEG Lipper
Even more interesting, it seems like European investors bought into the rally of U.S. Small- and Mid-Caps (+€1.2 bn) since the classification was the second best-performing Lipper Global Classification (+7.72%) for July.
Despite the leading position of equity ETFs with regard to overall inflows, the table of the 20 best-selling Lipper Global Classifications was dominated by bond products. While the inflows into money market products could be seen as a sign that investors want to take profit from the inverted yield curves, the inflows into the best-selling bond classifications tell a different story, as European investors bought into Bond EUR Corporates (+€1.4 bn), Bond Emerging Markets Global in Hard Currencies (+€0.6 bn), Bond EUR High Yield (+€0.6 bn), Bond Global USD (+€0.5 bn), Bond USD Short Term (+€0.5 bn), Bond GBP Government (+€0.5 bn), Bond USD Government Short Term (+€0.5 bn), Bond Global Corporates (+€0.5 bn), Target Maturity Bond 2020+ (+€0.4 bn), and Bond USD Corporates (+€0.3 bn).
On the other side of the table, Commodity Blended (-€0.7 bn) faced the highest outflows overall for July 2024. The classification was bettered by Equity China (-€0.4 bn) and Equity Japan (-€0.4 bn). The outflows from Equity Japan might be caused by investors who want to take profits prior to the expected rate hike by the Bank of Japan (BoJ) at the end of July 2024.
In addition, it looks like European investors decreased or transferred some of the emerging markets risks in their portfolios, since Equity Emerging Markets Global Small & Mid-Cap (-€0.2 bn) and Bond Emerging Markets in Local Currencies (-€0.2 bn) faced outflows while Equity Emerging Markets Global (+€0.3 bn) and Bond Emerging Markets in Hard Currencies (+€0.6 bn) posted estimated net inflows.
The content from this article has first been published on ETF Stream: https://www.etfstream.com/articles/european-etf-flow-insights-july-2024
The European ETF Industry Review – July 2024 can be found on Lipper Alpha Insight: https://lipperalpha.refinitiv.com/reports/2024/08/monday-morning-memo-european-etf-industry-review-july-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 LSEG Lipper or LSEG.
