ETF volumes remain weak as equities fall

Equity ETF inflows topped bond ETFs for a second week at the start of November but positive sentiment following the Eurozone deal disappeared as a turn in events left equity indices down.

"Europe/Greece turned into a sell off and pushed indices into the red for the week - final weekly moves were S&P -2.5% versus Eurostoxx -6.9%," reports Cowen.

"ETF volumes were again weak; US was down by 10% as per previous week whilst those of Europe again were below the norm by -5%/10% on average as conviction remains on the bearish side."

Cowen's primary market volumes were marginally net positive compared to the previous week as orders came in for corporate bond ETFs such as iShares Markit iBoxx $ Corporate Bond ETF, iShares Market iBoxx £ Corporate Bond ETF and iShares Barclays Capital Euro Corporate Bond ETF.

iShares Markit iBoxx Euro High Yield Bond ETF also saw strong participation and Cowen says that iShares reported creation orders of $205mn in Europe.

The company's ratio in the primary markets was measured at 2:1 in favour of creations, which it attributes to high demand for iShares Markit iBoxx Euro High Yield Bond ETF, iShares Markit iBoxx $ Corporate Bond ETF and iShares eb.rexx Government Germany 5.5-10.5.

In the secondary market, large sellers of fixed income ETFs meant that sellers outweighed buyers. iShares reported redemptions of £55mn in iShares FTSE UK All Stocks Gilt and Lyxor reported redemptions of €48mn in Lyxor ETF EuroMTS 3-5 year and 7-10 year. Money market ETFs also saw redemptions.

iShares Barclays Capital Euro Corporate Bond, iShares Markit iBoxx Euro Corporate Bond, db x-trackers II - Emerging Markets Liquid Eurobond Index ETF and Lyxor ETF Euro Corporate Bond led the on-screen volumes.

There were also large inflows into emerging markets ETFs, with iShares in the US reporting inflows into its MSCI Emerging Markets ETF of $1.4bn. iShares and Lyxor also had flows into their Asia ex-Japan ETFs.