Equity market: ETF demand falls in October

D.he uncertainty surrounding the American presidential election and the second corona wave in Europe reduced interest in ETFs globally from 48.6 to 42.7 billion euros in October. This is reported by the ETF provider Amundi. There were “skid marks” above all in equity ETFs, which, at EUR 17.4 billion, received only around half as much new money globally as in the previous month. Bond ETFs, on the other hand, were in greater demand globally, with a plus of 25.4 billion euros.

In Europe, however, equity ETFs were further ahead. 2.5 billion euros were newly invested in these, while bond ETFs only received 1.7 billion euros. Concerns about the further economic development would have led to outflows of bonds from the euro area totaling almost 1.6 billion euros, with around 70 percent accounted for as investment-worthy bonds. On the other hand, in view of fresh money in the amount of 2.74 billion euros, government bonds were in great demand – and bonds from Asia that investors would have looked at with more confidence. After all, 778 million euros were invested in ETFs on Chinese bonds and 592 million euros in ETFs on government bonds from emerging countries.

Equity investors were clearly nervous about the US presidential election. They withdrew 1.3 billion euros from American equity ETFs, and also somewhat slightly from Euroland shares. On the other hand, China and the emerging countries were also on the buying lists with inflows totaling almost a billion euros.

And because it worked so well in the first lockdown, investors turned to the tried and tested industries before the second. 531 million euros flowed into health stocks, while real estate was somewhat less in demand. Since the beginning of the year, the return of ETFs to the real estate industry now amounts to 543 million euros.

Over the past decade, both sector and ESG equity strategies have been popular, while ETFs on well-known indices and smart beta ETFs have seen little demand. Since the beginning of the year, inflows into ESG ETFs totaled 22.9 billion euros, while sector ETFs rose by 15.4 billion euros. In contrast, almost 7 billion euros were withdrawn from smart beta strategies.


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