ETF flows low as investors await G20 decision

ETF flows have been subdued this week as investors await a decision from the G20 before deciding where to allocate their cash, according to iShares.

"Last week there was a big sentiment shift for clients wanting to re-risk their portfolios and move from safer securities into more yield seeking securities - clients were putting money back to work," says Alex Claringbull, fixed income portfolio manager at iShares.

But despite a turn of events in Europe this week, investors have not rushed to re-allocate and flows have been low.

"Over the past couple of days investors have been quiet considering the amount of headlines coming out of Europe. They are sitting still for a little while; we aren't seeing that much flow either way."

Cowen International Trading reported moderate demand for corporate bond ETFs in the first few days of this week. In the primary market, iShares' euro corporate bond and euro high yield ETFs saw the most flows.

However, Clarringbull reports that the flows into yield products slowed after Monday, which was when the Greek prime minister George Papendreou announced a referendum on the bailout package agreed last week.

Plans for the referendum now look likely to be dropped but there is still uncertainty about what will come out of the G20 meeting.

Claringbull expects ETF activity to pick up next week once decisions are made: "One way or another I would expect to see increased flow activity after the G20 and into next week but that depends on what announcements are made... It's all eyes on the politicians to see what next week brings."