Last month, exchange traded funds worldwide saw $21 billion invested into US equities. This surge helped drive investment into equity ETFs to a high of $36.3 billion, the highest inflows recorded this year.
According to the BlackRock ETP Landscape Snapshot, so far this year, ETFs globally have recorded flows of $124 billion, which is a 25% increase on the first six months of 2013. Investment in the three months to the end of June totalled $91 billion, the best three month period since 2009. The most popular sectors of 2014 so far, have been fixed income and European and Japanese equities. US equities were not popular among passive investors at the start of the year, but have caught up significant ground over the last couple of months.
Emerging markets have fluctuated in favour year-to-date, but flows of $7.7 billion in June helped to bring total trades in 2014 into positive numbers.
“Investors continue to become more comfortable with emerging markets equity given improving fundamentals in certain countries and still-low interest rates in the US. Valuations are attractive relative to much of the developed world, though it remains important to tread carefully,” said Ursula Marchioni, head of ETP Research EMEA at iShares.
Of the emerging markets, the single country ETFs of China, Taiwan and India were most popular. Combined, topping the broader emerging market ETFs.
Fixed income fell from favour last month, with flows of just $400 million recorded. After an unexpected price rise at the beginning of May for T-bonds, investors seem decided that the fixed income rally is over and yields are ready to rise.
Regional data revealed that investors from the US and Latin America sold off their fixed income exposure in June, while investors from Europe and Canada added bonds to their portfolio. Investors across the regions bought up equities.
Year to date the most popular ETF globally is one that has exposure to broad developed markets, and the least popular is one exposed to the S&P 500.