Laurent Kssis at LaBranche Structured Products Europe (LSPE) discusses European ETF trades for the week ending 1 April.
Investors looking for an inflation hedge have contributed to big asset gains for exchange-traded products (ETPs) offering access to floating-rate debt, TIPS and gold in the first quarter of this year.
Commodity funds in general have won versus the major asset classes, with ETFS Wheat growing by $43m in March, the highest such figure since May 2008, and ETFS Physical Silver hitting record holdings. We expect commodity ETPs to continue to see inflows, although oil funds are now suffering redemptions.
Among institutional investors meanwhile there is a strong desire for yield, resulting in big inflows to funds such as iShares iBoxx $ High Yield Corporate Bond and Lyxor ETF iBoxx Liquid High Yield 30.
The close of Q1 saw a customary pickup in primary activities, with our primary market volumes last week doubling on those of the previous week. This was largely due to demand for new and clean energy ETFs, such as those from Lyxor and iShares, which represented over 25% of our total volumes.
Demand for Russia ETFs continued to see momentum, with Lyxor ETF Russia reporting creations worth €51m last week. Along the same lines, we also renewed creation orders in funds such as the iShares MSCI Eastern Europe and Lyxor ETF Eastern Europe on the back of very strong over-the-counter demand. We believe this trend was due to positive buying recommendations on single stocks within the baskets of all three of these ETFs.
We also witnessed large buys in db x-trackers MSCI EM EMEA and iShares Stoxx Europe 600 DE, while a number of investors were consolidating their positions in FTSE 250 ETFs.
It is worth noting that Japan ETFs are starting to see small outflows after three consecutive weeks of money coming in.
The highlight of this week is likely to be the release of the Federal Open Market Committee minutes, which we expect to reveal greater concerns about the downside risk to growth posed by higher oil prices than was implied in the statement.
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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