Last Updated: 31 January 2023
BlackRock has dominated passive fund flows in Europe so far this year, stealing the top five spots for new net inflows between January and June 2013 with a combined $6.8billion (€5.1billion).
Investors piled into equities in the UK, Japan, North America and emerging markets, according to data from US firm Strategic Insight.
The top spot went to BlackRock’s UK Equity Tracker index fund, bagging $2.4 billion alone. Other providers in the top ten included Legal & General, Vanguard, Credit Suisse and Deutsche Bank.
Exchange traded funds (ETFs) took four out of the top ten positions, with two investing in Japanese equities, highlighting investors’ preference to take tactical decisions in the region.
iShares head of strategy EMEA Stephen Cohen said the Japanese reflation theme was a key driver of domestic equity market performance with $26 billion of global ETP inflows in the first half of the year.
“Prime minister Shinzo Abe, who took office in December of last year, has been executing his bold three arrow plan to boost the Japanese economy,” he said. “The impact of the first two arrows – quantitative easing and fiscal easing – has been evident in H1 as economic data has started to pick up and earnings upgrades have started coming through.”
The iShares Euro Government Bond 3-5 year UCITS ETF was the only fixed income vehicle on the list, netting $729.6 of new inflows during the first six months of the year.
Across European markets as a whole, there was $10.3 billion of net inflows into the top ten passive funds.
According to data from ETFGI, the European ETFs and exchange traded products (ETPs) industry had 1,973 ETFs / ETPs at the end of July, with 6,183 listings and assets of $376 billion from 48 providers on 23 exchanges.
Adam Laird, passive investment manager at Hargreaves Lansdown, said the data was not surprising, and that it was clear European investors were happy to trust BlackRock with their capital.
“The asset spread is more telling: nine out of ten products are equity-based and it seems that European investors are to receive the gains that come from rising markets and recovering economies,” he said.
Laird added that European equities were the notable omission.
“Despite recent positive economic news from the region, many continental European markets have not seen the gains that other regions have and I think there is a desire for stronger signals before investors flow back,” he said.
On a global scale, iShares’ Cohen said the first half of the year’s passive flows were typified by a divergence between developed and emerging markets. Inflows to US equities crossed the $100 billion in global ETP inflows in July.
“The H1 economic environment was in favour of the US economy, where the resilient housing market and an uptick in corporate confidence were positive drivers,” he said. “The divergence between the US and European economies also meant investor focus on the US market.”