In their latest Monthly European ETF Market Monitor edited by Ursula Marchioni, Head of ETF Sales Strategy, Credit Suisse (www.csetf.com) report European ETF asset flows for May 2012. Following is a roundup of the key themes.
As at the end of May 2012, the European ETF market recorded assets of $264.36bn, down 8.45% from $288.76bn at the end of April 2012. This compares with the 8.99% decline of the MSCI World index over the same period.
During May, European ETFs recorded inflows of $3,234m. The result, however, was skewed by the behaviour of the same fund that defined the flows in April: the German-domiciled iShares DAX ETF (EXSI) index tracker. This ETF alone recorded inflows of $4,744m for the month. If the effect of this is removed, net new assets (NNA) for the month was negative, with outflows of $1,510m.
Aside from the DAX dynamics, ETF investors continued to favour debt/bonds, while broadly shunning equities. The two asset classes recorded inflows of $935m and $2,816m (or outflows of $1,928m if effect of the iShares DAX is removed), respectively.
Unlike in March and April, commodity ETFs recorded a negative month, with outflows of $773m – most likely a consequence of the gold sell-off seen in May, when the price of the London PM fixing lost 5.65%. Conversely, money market ETFs managed to reverse the negative trend recorded so far this year, with inflows of $336m for the month.
The ETF provider landscape – highlighting the overall picture of European ETF providers at the end of May 2012 – remained stable, with underlying market movements taking their toll on all providers’ assets under management (AUM). Among the top ten providers by AUM, May saw the strongest inflows for iShares, Source and db x-trackers. The year-to-date (YTD) picture sees the top providers in terms of NNA being iShares, Source and UBS.
Of note, iShares has performed very well YTD, in terms of NNA, due to the popularity of their credit offering (Corporate ex financials, $ High yield and $ Corporate). The iShares platform has also recorded solid inflows into emerging market (EM) bonds, MSCI World and MSCI EM. Source was the provider of choice for alternative strategies – mainly the Nomura Voltage and JPM Macro Hedge volatility-linked strategy ETFs and the active Man GLG pan European equity ETF. Meanwhile, UBS has recorded strong inflows in MSCI Canada, gold and their German government bonds series.
The largest outflows for the month of May were recorded by Lyxor, UBS and Amundi ETF. YTD, the worst performers in terms of NNA have been Deutsche Bank’s db x-trackers, Lyxor and Commerzbank’s ComStage.
In terms of replication method, the results of the month were driven by the iShares DAX trades, the fund being physically replicated.
May was a busy month for European ETF issuers, with 21 new launches. The highlight of the month was perhaps the launch of 5 ETFs by Vanguard – a much anticipated entry into the European market and one that may potentially change the dynamics of the market itself. Elsewhere, iShares launched 8 funds, offering single country sovereign exposure; State Street launched 5 ETFs – mostly on UK gilts; and Swedbank launched 3 products concentrating on their domestic equity market.
ETF assets under management at Credit Suisse, the report’s sponsor, at the end of May 2012 totalled $15.18bn, down 10.71% with respect to the end of April.