Uncertainty causes market movement in ETFs

The 15-page report, ETF Landscape, found that July’s global exchange-traded product flows were the highest that analysts had seen since September last year.

According to the report, the increase in fund flows during July could have been caused by investors looking to place their money in ‘safer’ areas in anticipation of a volatile September.

The report speculated that investors may have been “positioning for increased market volatility in September. There are a number of events and announcements with implications for the global economy.”

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It pointed to the release of US non-farm payroll numbers ahead of the September meeting of the Federal Open Market Committee, the German elections, meetings of other major central banks, US debt ceiling negotiations, and the escalating conflict in Syria.

Data showed that global ETP flows reached US$44.1bn (£27.89bn), the highest figure since September 2012, when flows were $45.1bn (£28.5bn).

Equity ETPs attracted the largest amount of flows in July, at $39.3bn (£24.85bn). In particular, pan-European developed markets equity exposures, listed globally, reached their highest total since December 2012, at $2.8bn (£1.77bn) of flows.

US equities also rallied in July, to $31.6bn (£19.98bn), following stronger-than-expected earnings.

Fixed income flows improved to $6.4bn (£4.04bn) and money trickled back into emerging markets equities, at $500m (£310m). Gold outflows continued, reaching $2.6bn (£1.77bn) and a year-to-date total of $30.9bn (£19.5bn).

Down: Gold - $2.6bn outflow in July

Up: Fixed income - $6.4bn inflow in July

Adviser view

Keith Churchouse, founder of Chapters Financial in Surrey, said: “This is a reflection of a more buoyant economy. Gold has slipped out of favour, but if there is a market correction, it will come back.”