Outflows from global equity ETFs have reversed in August, with €204m going into the asset class as investor attitudes improve, while European equities continue to suffer redemptions.
The latest monthly TrackInsight data has revealed Global Markets Large Cap ETFs have taken in money in August, after suffering outflows of €270m during the previous month.
Though inflow levels are relatively low, they seem to mark a reversal in sentiment towards global equity exposure, at a time when regional equities appear to display more volatility, with many macro events affecting stock markets.
The reversal comes despite a slowdown in inflows into both North American and Asian equities and a continued exodus from European equity ETFs.
In August, Developed Markets Europe Large Cap ETFs saw another €1.5bn leave as investors continue to fret over the impact of Brexit and the crisis in European banks. This adds to €2.9bn of outflows during July.
Meanwhile, Developed Markets North America Large Cap and Developed Markets Asia Large Cap both saw a dramatic fall in inflows. North American funds took in €953m in August, less than half of the €2bn seen in July, while inflows into Asian funds dropped from €1.2bn to just €21m.
Investors are hesitant to put more money into American equities amid uncertainty over the outcome of the impending election, which is to take place on 8 November, with polls suggesting a close call between Donald Trump and Hillary Clinton.
However, though inflows into Asian equities have slowed, emerging markets continue to enjoy demand, taking in €822m in August, up from €566m during the previous month.
This comes despite worries about the impact of a potential Trump victory in the US on countries in the region, with some suggesting it is particularly vulnerable to his proposed policies.
Emerging markets came into favour with investors this year, after months of outflows, as low valuations attracted those looking for yield. Yet worries remain over the impact of a potential interest rate hike in the US later in the year and the fluctuating oil price, as well as the US election outcome.
These worries have already started affecting sentiment for emerging market bonds, which have seen inflows reverse. Having taken in €674m in July, Emerging Market Bonds ETFs have shed €108m in August.
In the coming months all eyes will be on the US in the run-up to the presidential election, which is likely to cause further volatility in asset flows as polls fluctuate.
