Invesco’s Fixed Income ETFs
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European ETFs raised $68.6 billion in the third quarter, the strongest quarter ever recorded in the EMEA ETF industry in terms of net new assets and taking YTD NNA to $175.2 billion. A combination of robust flows and market performance gains of 7.1%, boosted AUM for the EMEA ETF industry by 10.5% during this quarter, up to $2.3 trillion.
The main themes seen in Q2 continued with equity products dominating and taking 66% of NNA over the quarter. Flows into fixed income ETFs remained robust with a 34% market share, ahead of their 24% AUM share at the start of the year. Commodity ETPs experienced further net outflows of $0.3 billion, mainly driven by sales of smart beta products.
Following the rate cut from the European Central Bank in June, both the Bank of England and the Federal Reserve cut rates in the third quarter, embarking on easing cycles that will see most central banks loosening monetary policy in the coming months. While this is likely to be supportive for financial markets, a reasonable amount of easing is already being discounted by markets due to rising geopolitical tensions. Record levels of cash are likely to be put to work and support markets on any pullbacks, investors need to continue being nimble to navigate events heading into year end. ETFs are likely to benefit as investors continue to use these low-cost and liquid investment tools to quickly and efficiently adjust their asset allocations.
Asset Class |
2023 Y/E AUM |
AUM |
Q2 NNA ($m) |
YTD NNA |
YTD % Market Moves¹ |
---|---|---|---|---|---|
Total |
1,811,419 |
2,252,964 |
68,550 |
175,157 |
14.7% |
Equity |
1,251,555 |
1,604,420 |
45,025 |
129,280 |
17.9% |
Fixed Income |
432,642 |
496,138 |
23,258 |
51,498 |
2.8% |
Commodity |
114,785 |
136,949 |
-309 |
-5,116 |
23.8% |
Source: Invesco, Bloomberg, as at 30 September 2024. All figures in USD.
While equity ETFs continue to lead NNA in absolute values, the pace of fixed income ETFs inflows remains ahead.
|
AUM ($m) | % of Current AUM |
Q3 NNA ($m) |
% of Q3 NNA |
YTD NNA ($m) |
% of YTD NNA |
---|---|---|---|---|---|---|
Non-ESG |
1,807,528 |
80.2% |
59,381 |
86.6% |
151,311 |
86.4% |
ESG |
445,436 |
19.8% |
9,170 |
13.4% |
23,846 |
13.6% |
Invesco, Bloomberg, as at 30 September 2024. All figures in USD.
EMEA ETFs have seen net inflows of $175.2 billion over the first three quarters. This is up 65% compared to the same period in 2023 and keeps NNA on course to beat record $192.9 billion set in 2021.
Following the European Central Banks decision to ease policy in June, both the Bank of England and the Federal Reserve cut rates during the third quarter, with most major central banks now in easing mode. Indeed, not only did the Fed ease policy, they did so with a larger than expected 50bps rate cut, and indicated that rates would need to be cut more quickly and deeply than they had previously expected. It is, however, worth noting that the Bank of Japan are going in the opposite direction and are tightening policy to curb inflation. During the quarter, concerns over the hawkish stance from the Bank of Japan caused some market volatility as the yen strengthened causing carry trades to be unwound. Investors used the pullback to add exposure to both equities and fixed income.
While central bank policy is likely to be supportive of financial markets in the coming months, some concerns still remain. Geopolitical risks continue to increase with the ongoing conflict between Russian and Ukraine while tensions in the Middle East are rising. Additionally, the US Presidential election result remains a close call as we head into the final weeks of campaigning. Nevertheless, there remains a positive tone in markets with many equity indices sitting at all-time highs. The current record levels of cash is likely to support markets in the final quarter of the year, as investors ready to put cash to work on any market pullback.
As we enter the final quarter of the year, our experts look back at the ‘year of the bond market’ and share their thoughts on the outlook for Fixed Income assets going forward.
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Bond markets rallied in September as the Federal reserve cut rates by 50 basis points for the first time this cycle, responding to mixed economic data and a softening labor market. Read our latest thoughts on how fixed income markets performed during the month and what we think you should be looking out for in the near term.
1 Source: Invesco using Bloomberg data on EMEA-domiciled products as a proxy, based on percentage change in AUM excluding the impact of NNA during the period.
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
Views and opinions are based on current market conditions and are subject to change. All data is provided as at 30 September 2024, sourced from Invesco unless otherwise stated.
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