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ETP Analysis USA

Equity and Fixed Income inflows boost ETP assets by 1% in August....

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Risky asset classes performance remained resilient in August

August recorded another favorable month for risky assets as investors continued to express interest in risky exposures. Global equities were slightly up by 0.34% last month, lead by EM equities with a 0.9% gain; while Intl DM and US equities followed with returns of 0.54% and 0.21%, respectively. Fixed Income returns were mixed with Credit posting positive returns and Rates recording losses. Similarly, Commodities were also mixed, with Energy recording a 6.15% gain and Precious Metals falling by 5.11%. On the currency side, the USD strengthened against most major currencies.

ETPs captured $27.5bn in new assets last month driven by Equity and Fixed Income allocations

During August, ETPs registered a boost in assets driven mostly by strong inflows into Equity and Fixed Income products. The $27.5bn in new cash received by ETPs sent assets to new all-time highs of $2.38 trillion at the end of August, a 1% increase from the previous month. Equity and Fixed Income ETPs experienced strong monthly inflows of $18.9bn and $9.0bn, respectively; while, Commodity ETPs registered moderate outflows of $0.4bn. At the conclusion of August, ETPs had accumulated a total of $138.2bn in inflows YTD, with $50.2bn received by Equity ETPs, $69.5bn received by Fixed Income ETPs, and $17.8bn received by Commodity ETPs. Fixed Income ETPs added their 14th straight month of inflows; and with 4 months to go, they have already surpassed the full year record of $60bn established in 2015 by almost $10bn.

Low Risk trend hits speed bump, while Preferreds and EM debt get a boost

Low Risk ETFs, likely the most popular ETF segment this year, experienced their first negative month of flows. In fact, August's outflows of $447mn put an end to a monthly inflow-streak of over 2 years. On the other hand, Preferred and EM Debt ETFs have received 10-digit record breaking inflows in recent months, adding $3.1bn and $3.9bn in the last 3 months, respectively.

August registered largest number of product closures ever

The closure of 41 products with combined assets of $1.1bn, in our opinion, far from being a sign of deceleration within the ETF industry, is a reminder that the word ETF in itself is not synonym of guaranteed success. Thus product differentiation and distribution strategy will be even more important for new products going forward.