Fidelity has provided more detail on the ETF flows for March in which actively managed exchange traded funds shone comparatively brightly.
According to ETFbook,com data analysed by Fidelity, ETFs saw net inflows plunge to $12.1bn (€10.3bn) during last month’s market turbulence when across the world share and bond prices fell in response to the surging cost of oil resulting from the blockade of the Strait of Hormuz in the US-led war against Iran.
That was 75% lower than the $49.3bn net average of the first quarter and 66% below the $35.5bn net average invested in ETFs each month in the previous year.
Fidelity’s figures confirm the finding from Morningstar figures released earlier this week which showed active ETFs increased their market share by pulling in €2.4bn out of the €9.4bn received by European exchange-traded funds in March, down from an average of €46bn in the previous two months.
“The Iran conflict is increasing uncertainty – and that is clearly visible in the numbers. ETF investors are still investing, but more selectively: less risk, more liquidity and more defensive building blocks, and more actively. Active ETFs represented 24% of all flows for the quarter up from a medium-term average of 7-8%” said Max Dawe, ETF strategist at Fidelity International.
North American equity ETFs turned negative with outflows exceeding inflows by $355m in March, marking a 110% decline from the $3.5bn monthly average of the previous year.
Europe and emerging market ETF inflows remained positive but saw sharp reductions. Europe equity funds received $4.3bn in March, down 53% on the first quarter average of $9.1bn and 35% on the 12-month average of $6.7bn. Emerging markets funds gathered just over $1bn, down 84% on their $6.6bn average for the first three months of the year and 68% lower on the 12-month average of $3.3bn.
Bond ETF flows just remained positive in March with overall inflows of $1.07bn, down 87% from the 12-month average of $8.1bn. However, defensive investor demand was firmly focused on short-term debt with all other types of medium and long-term fixed income stocks experiencing outflows.
These were most severe in riskier high yield bonds where $3.3bn was pulled from mostly passive exchange-traded funds, a startling 585% slump from the 12-month average of $681m inflows.
Government and corporate bond ETFs experienced net withdrawals of $576m and $527m respectively in March, down 123% and 130% from their $4.4bn and $1.4bn monthly aveage inflows of the previous year.
“March was not a classic crash month, but rather a month of recalibration. Whether the recent easing of tensions around Iran will revive the trends seen in previous months remains to be seen,” Dawe added.
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