Global ETF Inflows Reach $129.7 Billion in August

Global inflows into exchange traded funds (ETFs) are on course to surge to new record highs this year, as market volatility and a summer lull failed to damp buying in August. Investors poured a net $129.7 billion into ETFs in August.

The UK’s Financial Times (FT), citing data from BlackRock, which is one of the world’s preeminent asset management firms and a premier provider of investment management, said the inflows were below July’s record high of $198 billion but still above 2024’s monthly average, despite August traditionally being a quiet month for fund flows and despite market ructions at the beginning of the month, when the S&P 500 stock index plunged 6% in three trading days.

Net inflows for the first eight months of the year now stand at $969 billion, comfortably ahead of the $848 billion at this stage of the year in 2021, when the record full-year tally of $1.3 trillion was chalked up.

Demand for ETFs investing in gold, a traditional safe haven, has also picked up following a lengthy period during which ETF investors withdrew money, despite the gold price hitting record highs. Attitudes towards emerging markets in general and China in particular diverged sharply in August, though.

In contrast, BlackRock’s global ETF data points to $22 billion of net inflows into EM equity ETFs in August.

Brief Lull

Karim Chedid, head of investment strategy for BlackRock’s iShares arm in the Europe, Middle East and Asia (EMEA) region said that there was somewhat of a summer lull in August as there was a drop-down in inflows globally compared with July.

“But in equities we have continued to see buying in defensive sectors, and in fixed income, we have continued to see significant flows to duration exposures,” Chedid said.

According to BlackRock, global flows to Japanese equity ETFs hit $2.5 billion in August, following three months of outflows (which totalled $8.7 billion), despite Tokyo being the epicentre of the recent volatility, something Chedid attributed to a ‘buy on the dip’ mentality.

Fixed income ETF flows have been particularly strong in relative terms this year, with year-to-date flows of $288 billion well ahead of the $195 billion at this point in the record year of 2021, BlackRock said.

Chedid noted that monthly flows have been trending upwards this year, something he attributed to rising expectations of central bank easing.

He also said that despite the size of the overall ETF flows, an element of risk-off remains. Although technology was, as usual, the most popular equity sector, they have seen continued to see buying in defensive sectors, in financials and utilities, Chedid said.

In fixed income, government bond ETFs, the lowest risk category, sucked in $18.7 billion, while investment grade corporate bond funds took in $7.9 billion with high-yield bond ETFs just $0.8 billion.

With demand for emerging market debt also weak, Chedid said that this was consistent with the broader unwillingness we’ve seen among investors to take persistent risk in fixed income this year, the FT report said.

Elsewhere, JPMorgan chalked up record monthly flows of $1.7 billion for its Ireland-domiciled ETF range in August, led by the actively managed JPMorgan Global Research Enhanced Index Equity (ESG) Ucits ETF (JREG) with $653 million and the sister US-focused fund (JREU) with $638 million.