US investors have started selling their exposures to European equity ETFs as a strengthening dollar is drawing attention to domestic assets, while European counterparts continue to buy into local equities. Elsewhere, US financials are on track for the biggest annual inflows since 2013.
US-based ETF investors are withdrawing en masse from currency-hedged international funds, despite advice to the contrary. The three largest currency-hedged ETFs in the US have seen combined outflows of around $3.5 billion so far this year as the US dollar has declined more than 9% against rival currencies.
The promoters of ETFs enjoyed high net inflows over the course of first half 2017. In combination with positive market performance the assets under management in the European ETF industry increased for H1-2017.
European-listed exchange-traded products (ETPs) have seen another strong month in May, drawing in $11bn in inflows, as investors flocked to European equities after the reassuring result of the French presidential election.
Bond ETFs have been attracting strong inflows over recent weeks, despite high expectations of another rate hike by the US Federal Reserve at this month’s meeting. The growth in smart-beta fixed income offering and a better understanding of the products is drawing investors to passive bond exposure.
Amid global market uncertainty and a rising focus on costs, fund groups with a strong passives business are winning. The latest quarterly Pridham Report has shown that BlackRock, traditionally known for its strong passives offering, has triumphed in terms of net sales in the quarter.