Exchange-traded products (ETPs) across a number of markets were spooked by recent comments by the US Federal Reserve, leading to outflows in a number of ETP sectors, according to investment manager Blackrock.
In late May US Federal Reserve Bank chair Ben Bernanke stated the bank would taper its bond-buying program, which Blackrock claims has led to many investors exiting ETPs and lifting their trading volumes.
According to data collected by Blackrock, net outflows from ETPs in June reached $8.2 billion globally, which were also the first outflows since November 2011 when redemptions were only $100 million.
Blackrock stated that this shift of money out of ETPs was not due to a lack of confidence in the product, but rather that “investors use ETPs as readily available, precise, efficient exposure tools to express market sentiment”.
The scale of the shift was evidenced by ETFs accounting for 31 per cent of all trading volume in US equity markets in June, up from 20-25 per cent in recent months.
Emerging markets also saw sizeable redemptions in June of $6.6 billion, making it the fifth consecutive month for outflows of emerging market equities despite following many months of substantial inflows.
Other sectors to see outflows for the first time included fixed income ETPs ,which saw outflows for the first time since December 2010, while Gold ETP redemptions in June reached $4.1 billion, continuing a six-month trend bringing year-to-date outflows for gold ETPS to $28.2 billion.
The June outflows are a reversal from May, when flows reached $25.6 billion with large inflows into Japanese Equity ETPs reflecting investor preference within sector equities for more economically sensitive categories, and more robust flows into Intermediate-Maturity fixed income funds.
