Clear ETP and ETF sector themes, but mixed sentiment

Investors remain cautious with an eye on what is going on with the US debt ceiling discussions in Washington and the Greek Sovereign crisis developments in Europe, according to Deutsche Bank Securities North America equity research report.

As a result, equity markets in the US (S&P 500) plummeted by 2.06% over the last week. Total US Exchange Traded Product (ETP) flows from all products registered $1.4bn of outflows vs $10.6bn of inflows the previous week, setting the YTD weekly flows average at +$2.4bn. US ETP AUM lost almost $15bn, closing at $1.1 trillion or 10.2% up YTD.

However, the beginning of Q3 suggests that investors’ sentiment towards risky assets is mixed, according to the report. On a QTD basis, long-only Equity, Fixed Income, and Commodity ETPs have received inflows for $6.7bn, $2.2bn, and $1.6bn, respectively. Within the main asset classes we have seen inflows into Gold (+$1,8bn), Growth (+$1.5bn), EM Broad (+$1.0bn), High Yield (+$0.83bn), and Japan (+$0.71bn) ETPs.

From a geographic allocation perspective, US-focused ETPs have concentrated the bulk of the inflows (+$3.6bn), followed by DM ex US, EM, and Global ETPs with +$1.2bn, +$1.1bn, and +$0.7bn in the same period, respectively.
At a sector level, Precious Metals ETPs have recorded the largest inflows with $2.0bn; while Energy ETPs have registered the largest outflows with $337m.

LaBranche also saw clear themes at sector level. Precious metals recorded inflows of $2.3bn worldwide as global GOLD ETF holdings increased by 593.900 oz to 68.17 million oz, which is one of the largest inflows on record, according to LaBranche.

In emerging markets funds, global redemptions of $1bn over the last 2 months ended 3rd straight weeks of inflows. However, ETF volumes picked up in Europe, with a particular bias towards German funds as the DAXEX inflated by €1.5bn as well as German government bonds with an injection of over €100m on RXRGEX. said LaBranche.

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www.labranche.co.uk