ETP assets fell in August, defensives gained

European ETP investors shifted into defensives in August and out of risky assets in response to market volatility, Deutsche Bank reports.

The European exchange-traded products (ETP) market had outflows of €1bn last month, with ETFs experiencing outflows of €1.1bn, while exchange-traded commodities (ETCs) saw inflows of €100mn.

Total European ETP assets declined 5.9% during August, to end the month at €233.1bn. This was largely driven by falling asset prices, Deutsche reports.

Gold (€795mn), sovereign bonds (€542mn) and money market (€308m) products all had strong inflows, which Deutsche states is characteristic of the market mood where investors are exiting risky assets.

In line with that, equity ETFs had outflows. However, there were inflows in some major equity index ETFs; ETFs on Dax had inflows of €2bn, Eurostoxx 50 €438.1mn and Cac 40 €207.8mn. Stoxx 600, MSCI Emerging Markets and S&P 500 ETFs had the largest outflows.

Commodities - with the exception of gold - had outflows in August. However, Cowen reports a good week for commodities and industrial metals in particular at the end of the month.

Cowen reports a fall in on-screen volumes during August, as reported by European exchanges. In the last week of the month primary market orders were 4:1 in favour of redemptions and sellers outweighed buyers 9:1 in the secondary markets, which has been a consistent trend for the past three weeks.

In the last week of the month more than 25% of Cowen's redemption orders were in db x-tracker's MSCI USA ETF and iShares S&P 500 ETF also had large redemptions.

iShares' Dax saw the largest creation order of €389mn, while there were sizeable redemptions in Euro aggregate bonds ETFs, iShares FTSE/Epra European Property Fund and iShares MSCI Eastern Europe 10/40.