Inflows into global equity and bond ETFs have been declining for five months in a row, and for the first time since March 2018, money flowed out of US equity ETFs for two consecutive months.
This is according to BlackRock’s monthly ETF report. In February, $8.5 billion of new capital flowed into equity ETFs, while inflows in January were a whopping $33.3 billion. Inflows to bond ETFs halved from $28.6 billion to $12.8 billion.
For the first time in five years, money flowed out of US equity ETFs for two consecutive months: $5.5 billion. That money went mainly into European equity ETFs, according to Blackrock’s monthly report. However, US inflows into European equities remained in line with global trends.
Emerging markets, unlike January, could not get their pick of the crop in February. Only USD 600 million flowed into EM-ETFs. Interest in emerging market loans also visibly declined, with $1.5 billion of outflows.
Inflows for financials and healthcare
Most of the money ($1.4 billion) flowed into financials. The now highly adjusted sector saw net inflows in February for the first time since October.
Industrials and technology also saw more investment, seeing respective inflows of $500 million and $800 million, while energy ETFs and healthcare saw outflows of $1.8 billion and $1.4 billion, respectively.
Bond ETFs decline
Within bond ETFs, $1.6 billion flowed out of investment grade corporate bonds and $6.7 billion out of high yield. ETFs offering exposure to emerging-market debt also experienced an outflow of $1.5 billion in February.
In contrast, there were more investments in US government bonds. There was an increase in investments in bond ETFs to $10.9 billion, mainly US government bonds.
However, this was not a trend among European ETFs. In Europe, there were more investments in loans with good credit ratings; an additional one billion was invested in EMEA investment grade, of which $700 million was short-dated. January saw the most investment in bonds with longer maturities. There was also, for the fifth consecutive month, an increase in investment in high yield; $200 million in February.