High yield ETFs see increased demand

As equity indices continued their upwards trend last week, Cowen reports a strong increase in primary market activity.

Risk trades lead global activity, with the highest flows into high yield ETFs as a percentage of AUM since 2003.

In Europe, iShares attracted $112mn, increasing assets by 13%, while in the US, it increased assets by 4%, having added $323mn. The largest flows went into iShares MSCI Emerging Markets Index Fund, with $1.16bn in the US.

Emerging markets ETFs had their first inflows in 12 weeks and Cowen also reports the first flows into emerging markets bond ETFs in five weeks.

Redemptions came from iShares global government bond ETF (iShares reports $40mn), iShares eb.rexx Government Germany 5.5-10.5 ($45mn) and iShares eb.rexx Government Germany 2.5-5.5.

There were also redemptions in Lyxor Euro MTS 1-3Y, Lyxor Euro MTS 10-15Y and Lyxor Euro MTS Global.

The highest on-screen trading volumes (accounting for almost 40% of the volumes) came from iShares Euro and US high yield bond ETFs, db x-trackers MSCI Emerging Markets TRN Index ETF and db and Lyxor's Eurostoxx 50 ETFs.

In the commodities space, silver saw inflows of $18.2mn, inflows into ETFS Industrial Metals hit a six-month record, natural gas and crude oil were popular and Cowen reports a significant creation order in ETFS Short All Commodities by a German institution.

In the US, the S&P 500 moved up 1.12% last week but treasury yields dropped slightly and the DB Liquid Commodity Index was down by 2.18%.

This prompted modest outflows in the US ETP market, totalling $0.9bn. This compares to $6.6bn of inflows the previous week and the recent return to risk lost some momentum, according to Deutsche Bank.

While equities and commodities saw some outflows - $0.8bn and 0.2bn, respectively - fixed income had inflows of $0.1bn. ETP assets remained virtually unchanged from last week.

Markets in the Asia-Pacific region had very different fortunes; most fell last week, with China losing 5.5% and Hong Kong 2.57%. ETP AUM fell 0.8% to $90.7bn, this is still a year-to-date increase of $6.5bn or 7.7%, however.