The ETF Market Reached €589 Billion in the First Half of the Year

Global ETF inflows totaled $695 billion (€588.6 billion) in the first half of 2021. The U.S. market clearly dominated with inflows of $556.2 billion (€471.1 billion) (80%) followed by Europe with $10.6 billion (€90.3 billion) (15%) and Asia with $32.1 billion (€27.2 billion) (4.6%). More than three-quarters of the inflows (77%) or $528 billion (€447 billion) were attributable to equity ETFs. Bond ETFs recorded inflows of $159 billion (€134.6 billion) (23%).

In June, global ETF inflows totaled $10.5 billion (€8.9 billion). That is roughly in line with the May level. However, there were shifts among the regional ETF markets. While both U.S.- and European-registered ETFs saw inflows increase from the previous month (U.S.: $92 billion (€78 billion); Europe: $16.5 billion (€14 billion), Asian-registered ETFs saw outflows of $4.7 billion (€4 billion) in June.

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Inflows in Europe – first half of 2021

Equity ETFs registered in Europe saw inflows of $84.5 billion (€71.6 billion) in the first half of the year. Global indices recorded the bulk of flows in Europe with $40.5 billion (€34.3 billion) followed by the U.S. and North America with inflows of $20 billion(€17 billion) combined. As in previous months, there were further outflows from Asian and South American emerging markets (-$360 million (-€305 million) and -$272.2 million (-€231 million), respectively).

At the individual country level, ETFs on Japan indices $4 billion (€3.4 billion), UK indices $3.3 billion (€2.8 billion), and China indices $1.65 billion (€1.4 billion) increased. In contrast, ETFs on French equities -$657 million (-€557 million) and German equities -$584 million (-495 million) recorded outflows.

In terms of sectors, ETFs on financials were the most sought-after $5.3 billion (€4.5 billion), which Amundi said could reflect hopes for a robust economic recovery following the flattening Corona threats. This confidence could also explain the good demand for value strategies of $10.7 billion (€9.1 billion). ESG and climate ETFs also remained in investors’ focus. They attracted $36 billion (€30.4 billion) and $4.5 billion (€3.8 billion) respectively in the first six months – also driven by new regulatory frameworks.

Bond ETFs registered in Europe saw inflows of $18.3 billion (€15.5 billion) in the first half of 2021. Investors preferred corporate bond ETFs $9.8 billion (€7.8 billion) over government bond ETFs $6.4 billion (€5.4 billion).

U.S. corporate bonds were the most popular, with the investment-grade segment seeing inflows of $3.54 billion (€3 billion) and the U.S. high-yield segment seeing inflows of $1.4 billion (€1.2 billion). Investors withdrew funds from the eurozone – $400 million (€339 million) from the high-yield segment and $392 million (€332 million) from the investment-grade segment.

In government bonds, ETFs on Chinese paper were most in-demand in H1: $5.8 billion (€4.9 billion). By contrast, there were outflows in ETFs on eurozone government bonds -$1.9 billion (-€1.6 billion) and global emerging market bonds -$1.42 billion (-(€1.2 billion). US and eurozone inflation-linked bonds also saw inflows of $1.9 billion (€1.6 billion) and $1.77 billion (€1.5 billion), respectively.

On the bond side, investors also switched from traditional to sustainability indices $13.7 billion (€11.6 billion). This represents around 75% of total inflows into bond ETFs in the first half of 2021.

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(Featured image by viarami via Pixabay)

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First published in investrends.ch, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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