Following the new all-time high monthly inflows of €28.5bn in October, November inflows into ETFs in Europe marked yet another all-time high of €29.3bn.
These net new assets drove the estimated year-to-date net flows up to €225bn, which would mark a new record for estimated full year inflows. That said, the strong inflows over the course of November brought my expectations for the estimated full year net flows up to a range between €230bn and €240bn.
The flows in the European ETF industry over the course of November were dominated by equity ETFs at €29.3bn, while bond ETFs faced outflows €500m for the month. Unsurprisingly, the inflows into equity ETFs were fueled by the outcome of the presidential election, which saw US equity ETFs book estimated net flows of €17.3bn, shattering the old all-time high for monthly inflows - €6.9bn - which was achieved just a month ago.
Equity US small and mid-caps welcomed €4.2bn, making it the third best-selling classification overall followed by equity sector financials at €1.2bn. These strong inflows might be caused by the so-called 'Trump-trade', as the President-elect announced parts of his programme for economic growth and deregulation, especially in the financial services sector.
Nevertheless, the strong inflows into ETFs over the course of the month seem to be driven by a general demand for ETFs since equity global, the second best-selling classification, enjoyed strong estimated net inflows of €9.2bn.
Within the bond segment we found a story for US dollar denominated bonds, which we have seen for euro bonds in October, as European investors bought into Bond USD High Yield with €400m inflows and sold Bond USD Corporates with €700m outflows.
Also last month, European ETF investors bought Bond EUR High Yield with €1.6bn new assets in October but reduced their exposure to this classification over the course of November €300m outflows.
European investors are also reducing their exposure to emerging market bonds, as Bond Emerging Markets in Hard Currencies saw €1.4 bn outflows, while Bond Emerging Markets in Local Currencies and Bond Emerging Markets Other categories shed €300m and €40m, respectively. Bond Emerging Markets Corporates enjoyed marginal inflows of €50m.
More broadly, the fund flows for November show that European ETF investors are further in risk-on mode and were anticipating a clear result for the US presidential election as well as further declining interest rates in the US and the EU.
Detlef Glow is head of Lipper EMEA research at Refinitiv.
This article is for information purposes only and does not constitute any investment advice.