Laurent Kssis at LaBranche Structured Products Europe (LSPE) discusses European ETF trades for the week ending 29 October
Following Friday's US GDP report, a continued sluggish recovery is anticipated, prompting investors to substantially buy global inflation-linked ETFs including the db x-trackers iBoxx Global Inflation-Linked TR Index ETF, iShares Barclays Capital Euro Inflation Linked Bond ETF, and the Lyxor ETF EuroMTS Inflation Linked fund.
Global equity markets finished slightly lower last week, with the Eurostoxx 50 down 1%, and the Nikkei 225 down 2.3%, while the US was slightly higher with the S&P 500 flat. The volatility factor based on speculation ahead of this week's much anticipated events - including mid-term elections, the Federal Open Market Committee meeting, payrolls - have kept directional movements very hard to forecast, while sector moves have been driven by earnings.
Our primary volumes orders showed solid demand and large inflows in the ETF industry for the whole month of October. During the month, we injected net inflows exceeding $950m where the large majority was in Euro Corporate Bond ETFs, as well as emerging markets. Our creation order to redemption ratio was 5:1 in the primary markets, and buyers outweighed sellers by a ratio of 2:1 in the secondary markets - on screen.
Themes from last week include commodities, with the ETFS All Commodities DJ-AIGSM seeing creations of $50m, and emerging market ETFs, with iShares garnering $60m in creation orders. We created the iShares FTSE BRIC 50 and the iShares MSCI Emerging Markets ETFs on a daily basis.
Turkey remains a growth country target as the market index rallied 8.2% and demand for Lyxor ETF Turkey proved robust, with Lyxor reporting €17m in creation orders.
We created euro corporate bond funds, with the iShares Barclays Capital Euro Corporate Bond ETF and Lyxor ETF Euro Corporate Bond seeing well over €120m in the primary market. We continued to create the iShares Markit iBoxx Euro High Yield ETF on a daily basis - the fund now has $262m in assets under management.
We also witnessed large inflows of $74m into the iShares S&P 500.
On the other side, we have seen some selling in MSCI Europe funds, on potential profit taking. There were some sellers in Russia funds, with Lyxor reporting redemption orders of $11m.
The focus on redemptions was largely on government bond ETFs, where we redeemed orders in the iShares Barclays Capital Euro Government Bond 3-5 and the iShares Barclays Capital Euro Government Bond 7-10. These funds lost $50m in their AUM.
Note that the Tokyo Stock Exchange will be closed on 3 November, impacting all ETFs tracking the region.
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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