In August 2024, ETF fund inflows reached an impressive 88.8 billion euros, marking sustained momentum on the financial markets, according to Amundi ETF’s analysis. Investors were particularly keen on equities, with subscriptions reaching 46.7 billion euros, while bonds, often perceived as a safe haven in a context of economic uncertainty, also attracted 36.1 billion euros.
US indices, mainly in the “Large Blend” category, were the most sought-after, with inflows of 18.9 billion euros. This reflects the enduring appeal of US equities, even in the face of recent market volatility, particularly in the technology sector. By contrast, mixed strategies dedicated to large-cap US equities drew 2.6 billion euros, while investors were cautious about Japanese and Chinese equities, withdrawing 0.9 billion and 1.1 billion euros respectively.
A shift in equity strategies
The mixed performance of the US technology sector prompted investors to adopt a more defensive stance. In Europe, on the UCITS ETF market, equities collected 14.6 billion euros, with US indices leading the way, attracting 4.9 billion euros. Global and emerging indices were also attractive, with subscriptions of 4.2 billion and 1.2 billion euros respectively.
The healthcare and technology sectors were particularly popular, despite the technology sector’s underperformance relative to the S&P 500 since June. Investors injected 0.6 billion euros into IT stocks in August, while strengthening their positions in the healthcare sector with 0.5 billion euros, perceived as a more stable option in the face of financial market volatility.
Equal-weighted strategies and those dedicated to US ESG equities attracted new inflows of 0.7 billion and 0.7 billion euros respectively. Income and minimum volatility strategies also benefited from the current trend, with inflows of 0.6 billion and 0.4 billion euros respectively.
Bonds: a strong comeback supported by falling interest rates
The bond market also benefited from the fall in interest rates, particularly in the eurozone, with notable inflows of 5.1 billion euros into bond UCITS ETFs. Investment-grade corporate bonds attracted 2.8 billion euros, divided between strategies denominated in US dollars (1.5 billion euros) and euros (1.1 billion euros).
Subscriptions to sovereign bonds were mainly directed towards those denominated in dollars (1.2 billion euros) and euros (0.6 billion euros). However, investors opted to reallocate to short-term bonds, resulting in an outflow of 1.3 billion euros from long-term US government bonds.
ESG bond strategies, meanwhile, proved even more robust, with inflows of €1 billion, including €0.7 billion on Investment Grade bonds. The probable rate cut by the US Federal Reserve, due to weaker-than-expected job creation, could further support these strategies in the months ahead.
Outlook
August thus confirmed the attractiveness of ETFs for both equities and bonds, as investors seek to balance returns and risk management in the face of market volatility. According to Amundi ETF’s analysis, divergent economic outlooks across regions, particularly in Asia, and adjustments to the monetary policies of major central banks will continue to influence capital flows in the months ahead.
