This excellent map on country-specific equity exchange-traded fund (ETF) flows over the past month comes from UBS.
US equity ETFs received the largest inflows of $20.9 billion, with UBS citing a more dovish Fed and stabilisation in oil prices as the catalyst for sharp increase.
The same factors, along with a broader rally in commodity prices, also led to fund inflows to Brazil ($0.5bn) China ($0.5bn), India ($0.3bn) and Russia ($0.1bn).
European ETFs suffered the largest outflows — led by Germany at $0.9 billion — with UBS suggesting that a rotation into European credit overrode further monetary policy easing from the European Central Bank.
Despite the significant recovery in risk assets over the month — including in stocks — UBS global macro strategist Ramin Nakisa describes the move as “half-hearted”.
“The risk rally since mid-February shows a lack of conviction when we drill into ETF flows,” says Nakisa.
“In the US the largest inflows have been into defensive sector funds rather than cyclical funds. In Europe equity has had ETF outflows along with a sharp rotation into credit funds following the ECB’s decision to buy IG bonds, although HY funds have benefitted most in AUM terms (+17% over the last month).”
“Mutual fund flows from the end of February show that the largest inflows are into money market funds,” he adds.