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Informed Investor: Money Monitor A look back at European ETF market flows last month This document is for the exclusive use of investors acting on their own account and categorised either as “Eligible Counterparties” or “Professional Clients” within the meaning of Markets in Financial Instruments Directive 2014/65/EU. May 2019 Lyxor ETF Research
Marlene Kristo Durbaku Hassine Konqui ETF Research Analyst Head of ETF Research CONTEXT European ETF flows still slowing 2 Special focus 4 Modest outflows for equities 5 Fixed income flows weaken 6 Commodity flows still slightly positive 7 Positive trend continues for smart beta 8 ESG ETFs win out in May 9 Dive deeper 10
For professional clients only* 3
Informed Investor: Money Monitor May 2019
By Marlene Hassine Konqui, Head of ETF Research and Kristo Durbaku,
ETF Research Analyst
European ETF flows
still slowing
Net new assets in the European ETF market slowed again in May to €1.8bn from the €3.7bn we saw
in April.
This was largely due to a significant decrease in fixed income ETF inflows (€0.5bn from €4.1bn).
Equity ETFs experienced some very modest outflows (€-15m).
Meanwhile, flows into commodity ETFs were very slightly positive and very similar to those we saw
in April (€46m). Smart beta ETFs collected €0.4bn.
The biggest winners for May were ESG ETFs. They collected €0.9bn inflows, driven by broad strategies.
What happened last month?
€1.8bn
ETF flows dropped to €1.8bn from €3.7bn
A weaker month for fixed income
An almost flat month for equities
Modest outflows Fixed income Commodity flows Positive trend conti- ESG ETFs win out
for equities flows weaken still slightly positive nues for smart beta in May
-€15m €454m €49m €408m €897m
How does the YTD picture look?
€32.1bn
ETF flows started the year strongly,
but are now slowing
Fixed income, smart beta and ESG ETFs
lead the way
Equity ETFs are Still best ever start Negative year so far Strong start for Record start to a
this year’s laggards to a year for fixed for commodities smart beta year for ESG
income
€2.2bn €21.6bn -€237m €4.8bn €3.6bn
Source: Monthly data in EURM from 01/01/2019 to 31/05/2019 Bloomberg, Lyxor International Asset Management.
Note: This report is based on the data available on 31/05/2019.
Asset and flow data may be slightly adjusted as additional data becomes available.
All categories are exclusive and sum up to the total market flows.
*This document is for the exclusive use of investors acting on their own account and categorised either as “eligible
counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.
For professional clients only* 4
Special focus
ESG investing is YTD inflows
having an impact €3.6bn
More than €897m flowed into ESG ETFs in May are seeking to make a measurable, sustainable
2019, helping them achieve their second best impact alongside generating a financial return.
month ever. They also made up just under 50% For an increasing number of investors, the two
of the market’s total net inflows for May. YTD are inextricably interlinked.
flows are already approaching the total inflows
For now, that integration is voluntary but it may
for the category we saw in 2018 (€3.6bn vs.
become more systematic in time. We believe
€4.0bn). Broad ESG products gathered almost
ESG ETFs will benefit from the greater general
all of the inflows and, at the end of the month,
awareness of the environmental challenges we
accounted for around 12% of all European
all face and the regulations that will increasingly
market flows YTD – despite only representing
be used to address them. Small steps have
2% of all assets under management (see graph
already been taken. For example, the EU’s
below).
action plan for “Financing Sustainable Growth”
In our view, investors are more deeply (released in May 2018) encourages shareholders
integrating environmental, social, and to integrate sustainability considerations into
governance into their investment processes and their investment decision-making processes.
ESG ETFs share of overall flows and AuM
14.0%
12.0% 11.7%
10.0%
8.7%
8.0%
6.0%
4.0%
2.9% 2.7%
2.0%
2.0% 1.6%
0.7% 0.4% 1.1% 0.8% 1.1%
0.3% 0.5% 0.4% 0.6%
0.0%
-0.1%
-2.0%
2012 2013 2014 2015 2016 2017 2018 2019
ESG ETF’s share of overall flows ESG ETF’s share of overall AuM
Source: Lyxor ETF, Bloomberg data from 01/01/2012 to 31/05/2019.
*This document is for the exclusive use of investors acting on their own account and categorised either as “eligible
counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.
For professional clients only* 5
Modest outflows
for equities
-€15m
Little interest in equity ETFs Equity ETFs still lagging behind
Monthly NNA on equity ETFs Cumulated monthly NNA on equity ETFs
8,000 60,000 2016 2017 2018 2019
7,000
50,000
6,000
5,000 40,000
4,000 30,000
3,000
20,000
2,000
1,000 10,000
0
0
-1,000
-2,000 -10,000
-3,000 -20,000
May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019
Monthly net inflows on equity ETFs in Europe
Rebound for ..and for MONTHLY NNA AVERAGE OVER THE LAST 12M
1,500 US equities... Asia Pacific
1,271
equities
1,226
1,000 European
907
equities
500 suffer
534 however
0
-159
-281 -283
-390
-500 Emerging
Markets
equity
-1,000 -1,105 flows turn -1,085
negative
-1,500
Developed of wh. US of wh. of wh. of wh. Emerging of wh. of wh. of wh. Global
Market Equities Asia Pacific Europe World Markets Broad Region Countries Equities
Equities Equities Equities Equities Equities
YTD net inflows on equity ETFs in Europe
YTD NNA AVERAGE OVER THE LAST 5Y
6,000
More 5,022
4,000
weakness
for European 3,086 3,106 3,187
2,000 2,339
equities
1,051
0
-380
-1,784 Emerging Markets
-2,000
equities gather the
-4,000 inflows
-6,000 -6,009
-8,000 Difficult year for Developed
Market equities -9,231
-10,000
Developed of wh. US of wh. of wh. of wh. Emerging of wh. of wh. of wh. Global
Market Equities Asia Pacific Europe World Markets Broad Region Countries Equities
Equities Equities Equities Equities Equities
Source: Monthly data from 01/01/2014 to 31/05/2019, Bloomberg, Lyxor International Asset Management.
*This document is for the exclusive use of investors acting on their own account and categorised either as “eligible
counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.For professional clients only* 6
Fixed income
flows weaken
€454m
Fixed income flows collapse Still the best start to a year ever for fixed income
Monthly NNA on fixed income ETFs Cumulated monthly NNA on fixed income ETFs
7,000 30,000 2016 2017 2018 2019
6,000
25,000
5,000
4,000 20,000
3,000
15,000
2,000
1,000 10,000
0
5,000
-1,000
-2,000 0
May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019
Monthly net inflows on fixed income ETFs in Europe
1,500 MONTHLY NNA AVERAGE OVER THE LAST 12M
US govies Flows into
flows Emerging Market
1,000 increased govies collapse
1,110
726
500
431
40 22
0
-86
-500 -516
Flows into
Developed Market
-1,000 govies remain
strong
-1,454
-1,500
-2,000
Developed of wh. of wh. Emerging Corporate High Inflation Money
Market Europe US Markets Bonds Yield Linket Market
Govies Govies Govies Govies
YTD net inflows on fixed income ETFs in Europe
Emerging Markets Solid year so far for
7,000 govies enjoy corporate bonds YTD NNA AVERAGE OVER THE LAST 5Y
Strong interest in massive inflows
6,000 Developed Market govies 6,491
5,000 5,353
4,639
4,000
3,000
3,007 2,941
2,000
1,000 1,105
0
-731 -14
-1,000
-2,000
Developed of wh. of wh. Emerging Corporate High Inflation Money
Market Europe US Markets Bonds Yield Linket Market
Govies Govies Govies Govies
Source: Monthly data from 01/01/2014 to 31/05/2019, Bloomberg, Lyxor International Asset Management.
*This document is for the exclusive use of investors acting on their own account and categorised either as “eligible
counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.For professional clients only* 7
Commodity flows
still slightly positive
€49m
A second slightly positive month for commodities Still a negative start to a year for commodities
Monthly NNA on commodity ETFs Cumulated monthly NNA on commodity ETFs
600 4,000 2016 2017 2018 2019
400 3,500
3,000
200
2,500
0
2,000
-200 1,500
-400 1,000
500
-600
0
-800
-500
-1,000 -1,000
May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019
Monthly net inflows on commodity ETFs in Europe
100 Another little rebound MONTHLY NNA AVERAGE OVER THE LAST 12M
for gold in May
50
48
0 2
0
-1
-50
-100
-150
-200
-250
Gold Broad Platinium/Palladium Silver
YTD net inflows on commodity ETFs in Europe
1,000 YTD NNA AVERAGE OVER THE LAST 5Y
800
600
400
Broad commodities
200
78 suffer in 2019
0
-56 -24
-200
-235
-400
Gold Broad Platinium/Palladium Silver
Source: Monthly data from 01/01/2014 to 31/05/2019, Bloomberg, Lyxor International Asset Management.
*This document is for the exclusive use of investors acting on their own account and categorised either as “eligible
counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.For professional clients only* 8
Positive trend con-
tinues for smart beta
€408m
Flows into smart beta ETFs are still positive Best start to a year for smart beta
Monthly NNA on smart beta ETFs Cumulated monthly NNA on smart beta ETFs
2,000 9,000 2016 2017 2018 2019
8,000
1,500
7,000
6,000
1,000
5,000
500 4,000
3,000
0
2,000
-500 1,000
0
-1,000 -1,000
May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019
Monthly net inflows on smart beta ETFs in Europe
500 Flows surged into MONTHLY NNA AVERAGE OVER THE LAST 12M
Min Vol/Min Var
400 423
372 Multi Factor Quality factor flows
300 suffered increased again
outflows
200
100 131
102 105
71 84
0 32
0
-53 -66 -16
Strong inflows -90
-100 into risk-based -121
strategies -161
-200
Total Min/Vol Equal ERC Total Income Other Macro Total Multi Low Vol/ Momentum Quality Value Size
Risk Min/Var Weighted Fundamental Generation Micro Weighted Factor Factor Low Beta
Based Weighted Allocation
YTD net inflows on smart beta ETFs in Europe
2,500 YTD NNA AVERAGE OVER THE LAST 5Y
Income generators gathered
Strong year all the fundamental inflows
2,000 for risk-based Factor allocation strategy
2,040
strategies flows driven by quality ETFs
1,500 1,611 1,663 1,609
1,554 1,488
1,000
500
323 109 99
63 0
0
-53 -63
-324 -300
-500
Total Min/Vol Equal ERC Total Income Other Macro Total Multi Low Vol/ Momentum Quality Value Size
Risk Min/Var Weighted Fundamental Generation Micro Weighted Factor Factor Low Beta
Based Weighted Allocation
Source: Monthly data from 01/01/2014 to 31/05/2019, Bloomberg, Lyxor International Asset Management.
*This document is for the exclusive use of investors acting on their own account and categorised either as “eligible
counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.For professional clients only* 9
ESG ETFs
win out in May
€897m
Another strong month for ESG ETFs Best start to a year ever for ESG ETFs
Monthly NNA on ESG ETFs Cumulated monthly NNA on ESG ETFs
1,200 4,500 2016 2017 2018 2019
4,000
1,000
3,500
800
3,000
600 2,500
400 2,000
1,500
200
1,000
0
500
-200 0
May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2018 2018 2018 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019
Monthly net inflows on ESG ETFs in Europe
Broad ESG ETFs flows
1,000 accelerated sharply MONTHLY NNA AVERAGE OVER THE LAST 12M
897
800
600
400
200
30
0
-29
-200
Thematic Broad Low Carbon
YTD net inflows on ESG ETFs in Europe
4,000 YTD NNA AVERAGE OVER THE LAST 5Y
Strong start to a year
for Broad ESG flows
3,500
3,362
3,000
2,500
2,000
1,500
Little interest in
1,000 Low carbon ESG
500
146 118
0
Thematic Broad Low Carbon
Source: Monthly data from 01/01/2014 to 31/05/2019, Bloomberg, Lyxor International Asset Management.
*This document is for the exclusive use of investors acting on their own account and categorised either as “eligible
counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.For professional clients only* 10
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