ETF investors opt for safe havens

Blackrock reports there were US$85.7m net inflows to STOXX Europe 600 sector ETFs during the first week of July, while LaBranche states that Gold ETFs witnessed the largest weekly increase since May 2010 from 1.15m oz to 67.58m oz.

The largest sector ETF net inflows, according to Blackrock, were in basic resources with $74.7m, followed by food and beverage with $40.1m net inflows, while banks experienced net outflows of  $42.7m.Year to date STOXX Europe 600 sector ETFs have seen $87.5m net outflows. Insurance has the largest net outflows with $191.5m, followed by utilities with $181.4m, while banks experienced the largest net inflows of US$260.8m.
 
There is US$9.9bn AUM invested in the STOXX sector ETFs which is greater than the US$5.9bn open interest in the sector futures. The ETF AUM is greater than the open interest in the corresponding futures contract in 17 out of 19 sectors.

LaBranche Structured Products Europe Limited (LSPE), states that despite better than expected results from the European banks’ stress tests, European markets fell into negative territory in the week ending 15th July. The S&P was down -2.1% and the EuroStoxx: -4.1% with regional under performance from Greece (-5.9%) and Portugal (-5.9%). However, ETF volumes in Europe substantially picked up towards the end of the week as indicated by many ETF providers.

LSPE stresses that this period was one of the most volatile in the debt market experienced for a while, which resulted in strong equity turnover. Overall, the majority of movement came from liquid indices such as DAX (ishares reporting creation orders exceeding €500m), MSE & EUE (both Ishares and Lyxor reporting redemption totalling  €160m), CAC and Leverage CAC ETFs (Lyxor reporting 2 way orders exceeding €200m in many CAC ETFs) were the clear winners both in the primary and secondary markets.

Another overall theme was the redemption of Eastern European ETFs, such as CEC (redemption from Lyxor  of €31m), IEER, XMEE & CE9 (around €4m reported by Amundi).

Risk averse investors came back to the market with inflows into bond funds, a reflection of weaker equity sentiment. "But certainly not what could be called a mass exit yet, as demand for global Emerging markets such as IDEM & LEM remained strong," according to LPSE.

www.blackrock.co.uk  

www.labranche.co.uk