Weekly European ETF Trading Report 06 August 2019

European ETF trading commentary for the week ending 06 August 2019, provided by LaBranche Structured Products Europe (LSPE).

In the first week of August our primary market volumes doubled for the third week in a row, primarily due to strong demand for bond market ETFs.

Creations outweighed redemptions by slightly more than 2:1, with the biggest orders in the iShares MSCI Emerging Markets (LSE: IEEM) and iShares Markit iBoxx Euro Corporate Bond (LSE: IBCX), which together accounted for over 33% of our creation volumes. Incidentally, the US version of iShares’ emerging markets fund (NYSE: EEM) saw creations of US$1.3 billion in the same period.

We witnessed strong demand for euro, dollar and sterling corporate bond ETFs, with creations nearing the €150 million mark. Credit spreads for corporate bonds continued to tighten last week as investors sought to obtain higher yields.

Surprisingly, the Lyxor Euro Corporate Bond ETF (NYSE Euronext: CRP), with only €15 million in creations, did not enjoy similar traction to the iShares equivalent. However, Lyxor’s ETF EuroMTS AAA Government Bond (NYSE Euronext: MAA), which was launched in November 2009, has enjoyed substantial creations recently, with assets under management now topping €620 million.

At the same time, we witnessed sellers of other government bond ETFs, most notably iShares’ Euro Government Bond 15-30 (LSE: IBGL), 7-10 (LSE: IBGM), 3-5 (LSE: IBGX), and 1-3 (LSE: IBGS) ETFs, with reported redemptions in excess of €150 million.

LSPE witnessed a large creation order, in excess of US$90 million, in the iShares S&P 500 ETF (LSE: IUSA). The fund had lost over 20 million shares since the end of its exclusive licence in May, so a top-up of 7.5 million shares must have been reassuring for the provider.

Meanwhile, we saw buyers of the iShares FTSE EPRA/NAREIT Developed Markets Property Yield Fund (LSE: IWDP) and the AXA EasyETF FTSE EPRA Eurozone (NYSE Euronext: EEE), a surprising sign of investors returning to the developed real estate segment.

The winning theme last week was undisputedly agriculture and ETFS Wheat (LSE: WEAT) in particular, with the ETC climbing 20% until Thursday evening on extremely heavy volumes, before retreating slightly to end the week up 15%. ETFS Corn (LSE: CORN) was up 6% and ETFS Soybeans (LSE: SOYB) up 4.2%. On the flip side, we saw heavy sellers of the ETFS Short Crude Oil (LSE: SOIL) and all short agriculture ETCs, including the ETFS Short Wheat (LSE: SWEA), which saw the largest volumes both on- and off-exchange and fell 14% last week.

This report is not an offer to sell or a solicitation of any investment products or other financial product or service, an official confirmation of any transaction, or an official statement of LSPE.

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