A clear cautious approach can be seen in the behaviour of ETF investors in recent weeks, with flows for the latest month showing a preference for European (and global) bonds over equities.
european equity ETFs
Investor sentiment towards various geographical regions has been driving their investment decisions so far this year, with some of the best performing equity markets failing to gain the support they deserve, while underperforming developed equities have taken in the bulk of the money.
While US-based investors have been fleeing equity ETFs throughout February, especially in their home market, European buyers have remained resilient despite the volatility. However, overall equity ETFs have seen over €4bn of outflows during the month, as a general risk off mood has spread across markets.
European equity ETFs have seen subdued demand in the first month of 2018, having suffered net outflows of nearly €3.5bn, while US equities were the stars of the show, taking in almost €40bn during January.
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.
European markets enjoyed a strong relief rally after the first round of French elections came to an end and the results came close to those predicted by the polls.