What a difference a month makes. Investors shifted gears in
July, showing a strong appetite for global exchange traded
products as the stock market surged to new highs.
The cautious sentiment we saw in June was short-lived as the
growth of the ETP industry continued its forward march.
Year-to-date flows into global ETPs climbed to $143.3 billion by
July 31. After June's setback when investors pulled money from
ETPs, flows have now vaulted back ahead of 2012's record pace of
$128.3 billion at this stage of the year.
Global ETP inflows for July hit $44.1 billion, the strongest
month since September 2012. Of note, equity flows set a new 2013
monthly high of $39.3 billion, with investors gravitating to US
equities. US sector fund flows swelled to $6.2 billion, a monthly
tally not seen since 2008; flows were stronger in more
economically-sensitive sectors, like financials and technology,
than traditional defensive industries.
The about-face from June came as investors appeared more at
ease with the outlook for the economy and interest rates.
Better-than-expected corporate earnings for the second quarter
soothing comments from Fed Chairman Ben
about the pace of the government's bond buying programs helped
the S&P 500 notch its largest monthly jump since January.
The index gained 5% in July
and touched a fresh high.
With more clarity from Bernanke, global fixed-income ETP flows
improved to $6.4 billion in July following June's $8.4 billion in
outflows. Investors did show some risk appetite: High yield bond
ETPs raked in $2.6 billion of flows during the month - the most
since Feb. 2012.
In other developments, investors dipped their toes into
emerging market equities, which posted the first month of inflows
(at $515 million) since January, and continued their stampede out
Backed by "Abenomics,"
Japan ETP flows remained strong, with another $2.0 billion
collected in July, bringing year-to-date flows to $28.0
S&P 500 recently topping 1,700 for the first
, we will see what August brings. What July showed was the
of ETPs after June's pullback.
Dodd Kittsley, CFA, is the Head of Global ETP Market
Trends Research for BlackRock and a regulator contributor to
. You can find more of his posts
Sources: Blackrock ETP Research and Bloomberg