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European-domiciled ETF flows moved into negative territory for the first time since 2020 in June as investor appetite softened amid heightened volatility in financial markets. The ETF market saw -$118 million of outflows in June, having experienced $3.0 billion of inflows the previous month. While equity ETFs saw positive net flows ($2.6 billion), this was more than offset by outflows from fixed income (-$2.3 billion) and commodity (-$629 million) products.
Within equities, the ‘market access’ category—which includes difficult-to-access markets such as emerging markets—led the inflows in June, taking in $1.7 billion. Of this, the large part of the inflows went into China ($1.4 billion) and Brazil ($482 million) exposures. Core ETF strategies added $1.3 billion of inflows, of which the largest geographical exposures were world ($1.0 billion), global ($639 million) and Switzerland ($608 million). These inflows were in part offset by negative flows from United States (-$472 million) and eurozone (-$345 million) core ETF products. Sustainable ETFs gained traction after a muted May, recording $1.2 billion of inflows, primarily driven by investments into world ($435 million), China ($353 million) and Japan ($267 million) exposures. Segment and sector equity ETFs saw outflows of -$479 million and -$1.5 billion respectively, with eurozone ETFs (-$157 million) hemorrhaging the most assets in the segment category and world exposures (-$970 million) suffering the largest outflows among sector ETFs.
In fixed income, total outflows of -$2.3 billion were mainly attributable to high-yield and inflation-linked ETFs, which suffered outflows of -$1.8 billion and -$879 million respectively. Outflows were offset in part by inflows into government bond and green bond ETFs, which saw inflows of $1.4 billion and $138 million respectively. The asset class’s US Treasury exposures ($2.1 billion) accounted for the majority of government bond ETF inflows, while emerging market (-$723 million) and China (-$442 million) government bond products saw negative flows. Outflows of -$1.8 billion from high-yield fixed income ETFs came predominantly from United States (-$1.2 billion) and eurozone (-$478 million) exposures. Net outflows of -$879 million from inflation-linked bond ETFs were led by redemptions from eurozone (-$485 million) and United States ($239 million) products. Corporate bond ETF exposures were also negative contributors to fixed income ETF assets in June, losing -$771 million of assets, which came mostly from in eurozone (-$624 million) and emerging market (-$232 million) ETFs; these outflows were offset in part by inflows into global and United States corporate bond ETFs, which attracted assets of $251 million and $202 million respectively during the month.
Commodity ETFs suffered redemptions of -$629 million in June, with broad allocations (-$357 million), precious metals ETFs (-$184 million) and commodities vehicles excluding agriculture (-$127 million) all seeing outflows. Commodity ETF strategies excluding energy were the only category within commodities to see positive flows in June, with $127 million.
In June, the Vanguard UCITS ETF range captured net inflows of approximately $1.3 billion, broadly in line with inflows the previous month. Flows were led by Vanguard’s equity UCITS ETF range ($1.1 billion), followed by fixed income ($117 million) and multi-asset ($14 million) products. In equity, the Vanguard FTSE All-World UCITS ETF ($407 million), the Vanguard FTSE All-World High Dividend Yield UCITS ETF ($292 million) and the Vanguard S&P 500 UCITS ETF ($187 million) saw the largest inflows. The Vanguard FTSE 250 UCITS ETF saw outflows of -$122 million.
The Vanguard fixed income UCITS ETF range experienced inflows of $117 million in June, primarily driven by inflows into the Vanguard EUR Eurozone Government Bond UCITS ETF ($50 million), the Vanguard USD Corporate Bond UCITS ETF ($38 million) and the Vanguard USD Corporate 1-3 Year Bond UCITS ETF ($36 million).
The Vanguard LifeStrategy UCITS ETF range continued to see investor interest, attracting $14 million of inflows.
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The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.
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