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Renewed interest in EM govt bond ETFs

ETF

Emerging market government debt ETFs have had a turnaround in flows during Q3 after two quarters of outflows, according to Amundi Asset Management.

Using Bloomberg data, Amundi found that in Q3 emerging market government debt ETF flows reached €800m. During the quarter, European investors preferred government debt ETFs with €1.1bn in flows, compared to €793m for corporate debt ETFs.

Amundi Asset Management’s head of ETF product specialists, Nicolas Fragneau, said after an “appalling second quarter of global ETF flows” Q3 had accelerated with net new assets amounting to €42.9bn, up €31bn from August, and totally €308bn for the year so far.

“European equity ETFS had found appeal with investors, bringing in more than €1bn over the period,” he said.

“Flows in global equities have almost dried up in Q3 and it represented the majority of subscriptions in the previous quarter.”

The asset manager also found that in Europe, out of the €5.4bn flows during the quarter, €5.06bn went into equity ETFs and €1.05bn into bond ETFs, whilst commoedities products were hit by withdrawals of €763m.

“In September, European investors cautiously poured €417m into European equity ETFs and €171m into eurozone equity ETFs,” Amundi said.

“They continue to focus predominately on ETFs tracking US equities (€1.9bn) and also sought exposure to international equity markets (€718m).”

Fragneau noted that defensive stocks had also been favoured as they represented 80% of flows allocated to sector ETFs.

“We saw the same cautious approach in the factor universe since minimum volatility and quality factors have captured most of the €1bn allocated in the universe over the quarter,” he said.

Jassmyn Goh

Jassmyn reported from Sydney to New York to Jakarta before joining Expert Investor. She was most recently Features Editor at Money Management and Super Review in Sydney.

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