BLACKROCK GLOBAL ETP LANDSCAPE MONTHLY SNAPSHOT JANUARY 215 The opinions expressed are as of January 31st, 215 and may change as subsequent conditions vary.
Summary BlackRock ETP Research A cross-regional team analyzing global markets to deliver insights on the intersection of investment trends and ETP flows For inquiries, please email ETPresearch@BlackRock.com JANUARY ETP FLOWS HIGHLIGHTED BY STRENGTH FOR NON- U.S. DEVELOPED MARKETS EQUITIES AND FIXED INCOME Global asset gathering moderated from recent months to $11.6bn, with significant inflows for Europe equity and corporate bonds diverging from heavy redemptions for U.S. large cap and EM equity The more aggressive than expected ECB quantitative easing announcement was well received by the market, contributing to record flows of $8.4bn for pan- European equity and $13.7bn for Europe-listed ETPs Exchange rate movements, particularly U.S. dollar appreciation against the euro, led to a new monthly high of $6.9bn for currency-hedged ETP flows, which were concentrated in Europe and EAFE equity exposures Equity market volatility, uncertainty surrounding global growth and the ECB stimulus news all supported ongoing demand for fixed income funds, which gathered $13.bn, and kept downward pressure on interest rates Commodity flows accelerated to $5.2bn, the greatest monthly total in nearly five years, due to crude oil inflows following the collapse in oil prices as well as the first significant gold inflows since June Subscribe Global ETP Highlights... 3 Year-to-date Overview.. 5 Reference Schedules To receive the ETP Landscape series of reports, please visit our website: www.blackrockinternational.com/etflsubscribe Flows by Listing Region.. 6 Fund Inflows and Outflows. 7 ETP Flows by Exposure.. 8 [ 2 ]
Global ETP Highlights Global ETP flows 1 of $11.6bn in January moderated from the pace set in Q4. This was largely due to redemptions of ($18.3bn) for U.S. equity funds, a key driver of last year s record industry growth. The S&P 5 was down 3.1% in January 2, reminiscent of a similar slow start to the year in. KEY INVESTMENT THEMES / ETP FLOW TRENDS By contrast, 215 began with surging demand for non-u.s. developed markets equities, which gathered $18.2bn. Fixed income added $13.bn along with $5.2bn for commodities. Europe equity Japan equity Broad dev. eqty Inv. grade corp. Broad EM eqty China equity Pan-European equity funds brought in $8.4bn, their best month ever, helped by the ECB announcing an open-ended plan to purchase 6 billion euros of sovereign bonds per month. The larger than expected size, lack of firm end date and inclusion of long-term bonds were well received by the market. The euro depreciated against the dollar, with the exchange rate reaching 1.13 dollars per euro. 3 This spurred significant flows into currency-hedged ETPs (see below) across geographic exposures as investors anticipate further dollar strength. Switzerland equity added $.3bn following the SNB s surprise change in policy to allow the Swiss franc to appreciate against the euro. It was the second consecutive month of inflows following the $1.2bn from December. Japanese equity gathered $3.2bn, the second month in a row of significant inflows after news of greater central bank stimulus and Prime Minister Abe s recent election victory. The majority of the flows were again from Japan-listed funds. GLOBAL ETP FLOWS 1 215 YTD Flows of $11.6bn vs. Flows: $329.6bn Flows (US$bn) 2 15 1 5 (5) U.S. equity Non-U.S. dev. equity EM equity Fixed income Commodities & other 9.5 32.9 68.2 138. 11.6 Q1 Q2 Q3 Q4 Jan-15 SPOTLIGHT ON CURRENCY-HEDGED EQUITY ETPs The U.S. dollar index (DXY) has risen 18% over the last six months 4 and the dollar is expected to appreciate further in 215. In January alone, currency-hedged equity ETP flows reached nearly half of the total for all of. The global market has surged to $53bn, up from $1bn two years ago. Three key drivers have fueled this growth: GLOBAL CURRENCY-HEDGED EQUITY ETP FLOWS 1 215 YTD Flows: $6.9bn vs. Flows: $14.3bn 25 2 USD (Europe) USD (EAFE) USD (Japan) Other 2.1 1) General divergence of U.S. economic growth, central bank policy and interest rate expectations with Japan and the eurozone has contributed to currency volatility and increased demand for funds that can protect returns Flows (US$bn) 15 1 14.3 6.9 2) The late-212 election of Prime Minister Abe and acceleration of Bank of Japan stimulus, which were catalysts for 213 Japan equity ETP flows of $1.2bn (dollar hedged) and $3.8bn (euro hedged) 5 2.1 2.9 211 212 213 Jan-15 3) Relative eurozone weakness and long-anticipated ECB stimulus led to dollar-hedged flows of $4.bn in January following $7.bn last year (EAFE funds are also benefitting) [ 3 ]
Global ETP Highlights (cont d) Minimum volatility funds brought in $1.9bn, predominantly from U.S. equity exposures. This followed Q4 flows of $2.5bn, 7% of last year s total. The average VIX level over the past month rose to 19., versus 16. during Q4 and 13.5 for the first nine months of. 5 Though U.S. equities overall shed ($18.3bn), a single fund (SPY, the SPDR S&P 5) accounted for ($28.bn) in a sharp reversal from December inflows of $17.8bn. 6 The remaining $9.7bn ex-spy was concentrated in broad market and high dividend yield funds. Broad EM equity remains out of favor. Redemptions of ($2.3bn) were the third in four months following inflows for much of. China equity redemptions accelerated to ($5.5bn) as the A-share market has cooled following a speculation-fueled rally driven by domestic investors. India equity was a bright spot, gathering $1.bn as investors hold out hope surrounding prime minister Modi s reform agenda. Fixed income momentum from a record carried into the new year. Overall corporate bond flows of $6.1bn were the best in three years. The ECB easing had a sizeable impact on Europe-listed flows of $5.1bn, split between investment grade corporate and sovereign bonds. U.S.-listed fixed income asset gathering was also robust at $7.4bn. Flows spanned multiple categories, from Treasuries to corporate bonds (investment grade and high yield) to broad U.S. market funds to municipals. Interest rates pushed lower, with the 1-year Treasury reaching 1.64%. 7 RESULTS AT A GLANCE 1 (US $billions) Jan 215 Dec Jan Monthly Flows 11.6 6.8 (6.7) Assets 2,776 2,797 2,322 # of ETPs 5,42 5,431 5,54 GLOBAL 13-MONTH ROLLING FLOWS 1 215 YTD flows: $11.6bn vs. Flows: $329.6bn (US$bn) Commodity flows hit a five-year high of $5.2bn. Investors poured $3.6bn into crude oil funds anticipating a bottom to the collapse in oil prices. Gold rallied leading to inflows of $2.3bn in a reversal from five consecutive months of redemptions. Equity Fixed Income Commodities & Others GLOBAL ETP ASSETS BY YEAR 1 Assets ($bn) 3, 2,5 2, 1,5 1, 5 Equity Fixed Income Commodities & Others 79 19 146 218 319 428 598 851 772 1,156 1,483 1,525 1,945 2,396 2,797 2,776 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Jan-15 [ 4 ]
Year-to-date Overview GLOBAL ETP FLOWS BY EXPOSURE 1 (US$bn) January 215 January Annual Equity Developed Markets Equity (.1).9 243.9 Emerging Markets Equity (6.4) (8.7) (1.8) Total (6.5) (7.7) 242.1 Fixed Income Government 3.9 1.6 19.5 High Yield Corporate 2.3 (.3) 4. Investment Grade Corporate 3.8 1. 22.4 Others 2.9 1. 39. Total 13. 3.4 84.9 Commodities & others Total 5.1 (2.3) 2.6 Grand Total 11.6 (6.7) 329.6 GLOBAL ETP CUMULATIVE FLOWS 1 35 215 YTD Flows $11.6bn vs. Flows: $329.6bn 3 215 25 213 2 212 15 329.6 262.6 236.1 1 5-5 11.6 J F M A M J J A S O N D CUMULATIVE EQUITY ETP FLOWS 1 215 YTD Equity Flows: ($6.5bn) CUMULATIVE FIXED INCOME ETP FLOWS1 9 215 YTD Fixed Income Flows: $13.bn 84.9 3 25 2 215 213 212 248.1 242.1 17.7 8 7 6 5 215 213 212 7. 15 4 1 3 27.1 5 (6.5) J F M A M J J A S O N D 2 1 13. J F M A M J J A S O N D -5 [ 5 ]
Flows By Listing Region Highlights (US$): 1 U.S.-listed ETPs posted outflows due to U.S. large cap equity redemptions after averaging $2bn per month in Europe-listed ETPs gathered a new monthly high of $13.7bn, already 22% of last year s record flows Canada-listed ETPs gathered $.3bn, the twelfth consecutive month of inflows Asia Pacific-listed ETP flows were flat as Japan-listed inflows were largely offset by China-listed redemptions MTD FLOWS BY LISTING REGION 1 ASSET GROWTH RATES AND # OF ETPs 1 (# ETPs) 15 Equity Fixed Income Commodities & Others Year-Over-Year Growth in # ETPs 1 5 Bubble size = Assets ($bn) Europe $468 Canada $62 Asia Pacific $21 U.S. $1,984 Latin America $8 (3%) (15%) % 15% 3% Year-Over-Year AUM Growth LISTING REGION VIEW 1 By Listing Region Net Flows ($bn) Jan 215 Annual Jan 215 Assets ($bn) % Asset Market Share Number of Products US (2.6) 244.9 1,984.3 71.5 1,65 Europe 13.7 61.8 467.9 16.9 2,244 Canada.3 9.1 61.8 2.2 352 Latin America.3 (2.) 7.6.3 46 Asia Pacific (.2) 15.8 21. 7.2 75 Middle East and Africa Not available Not available 53.7 1.9 378 Global ETF Total 11.6 329.6 2,776.4 1. 5,42 [ 6 ]
Fund Inflows and Outflows 215 YTD ETPs Product_Name as of January 215 (US$bn) 1 Bloomberg BB_Ticker_S.. Ticker MTD Flows (US$bn) Inflows WisdomTree Europe Hedged Equity HEDJ US 2.9 SPDR Gold GLD US 2. Vanguard S&P 5 VOO US 1.6 Vanguard Total Stock Market VTI US 1.4 db-x MSCI EAFE Currency-Hedged Equity DBEF US 1.2 United States Oil USO US 1.2 ishares Core S&P 5 UCITS ETF CSSPX SW 1.1 Health Care Select SPDR XLV US.9 ishares iboxx $ High Yield Corporate Bond ETF HYG US.8 Market Vectors Gold Miners GDX US.8 Grand Total 13.9 Current Jan-15 AUM (US$bn) Assets 9. 3.7 28.3 5.8 3. 2.3 11.1 13. 15.3 7.5 171.1 215 YTD ETPs Product_Name as of January 215 (US$bn) 1 BB_Ticker_S.. Bloomberg Ticker MTD Flows (US$bn) Outflows SPDR S&P 5 SPY US (28.) PowerShares QQQ QQQ US (3.) Financial Select SPDR XLF US (2.1) ishares FTSE A5 China Index ETF 2823 HK (2.) ishares Russell 2 ETF IWM US (1.7) Huatai-Pinebridge CSI 3 513 CH (1.4) ishares MSCI Japan ETF EWJ US (1.3) ishares MSCI ACWI ETF ACWI US (1.) ishares MSCI Emerging Markets ETF EEM US (1.) SPDR Dow Jones Industrial Average Trust DIA US (.8) Grand Total (42.3) Jan-15 Current AUM (US$bn) Assets 181.7 36.6 17.7 8.9 27.7 3.8 13.6 6.3 31.4 11.8 339.5 [ 7 ]
Equity ETP Flows by Exposure Equity Exposure Jan 215 Flows ($bn) 215 YTD Flows ($bn) Assets ($bn) # ETPs Large cap (27.5) (27.5) 577.8 244 Mid cap 1.7 1.7 98. 46 Small cap/micro cap.. 93.9 76 Total market/extended Market 3.1 3.1 94.6 72 Preferred stock.7.7 16.9 5 US size & style total (22.) (22.) 881.1 443 Basic Materials (.1) (.1) 5.5 15 Consumer Cyclicals (.4) (.4) 18.4 19 Consumer Non-cyclicals.3.3 16.1 13 Energy 1.7 1.7 41.7 49 US Financials (3.8) (3.8) 33.4 41 Health Care 2.4 2.4 43.4 36 Industrials (.9) (.9) 15.4 2 Real Estate 1.1 1.1 47. 23 Technology (.) (.) 31.3 3 Telecommunications.. 1.5 6 Utilities.9.9 14. 13 Others.. 2. 8 US sector total 1.2 1.2 269.7 273 US high dividend / other strategy 2.5 2.5 92. 88 US total (18.3) (18.3) 1,242.9 84 Canada (1.) (1.) 28.5 98 North America regional equity.1.1 9.6 25 Large Cap 2. 2. 43.3 85 Mid/Small Cap.. 3.5 27 Total Market 5.6 5.6 6.1 95 Pan European size & style total 7.6 7.6 17. 27 Pan European sector.6.6 14.6 143 Europe Pan European strategy.2.2 3.8 31 Pan European total 8.4 8.4 125.9 381 Germany 1.1 1.1 28.2 75 U.K. 1. 1. 21.4 65 Other European countries.1.1 29.1 148 Europe single country total 2.2 2.2 78.6 288 Europe total 1.6 1.6 23.9 669 Japan 3.2 3.2 138.9 19 Asia-Pacific Other Asia-Pacific.5.5 43.2 162 Asia-Pacific total 3.7 3.7 182. 352 Broad developed markets (including Global/Global ex-us) 4.8 4.8 239. 511 Developed markets total (.1) (.1) 1,97.1 2,459 Broad emerging markets (2.3) (2.3) 111.9 126 Regional emerging markets (.1) (.1) 6.1 7 China (5.5) (5.5) 68.5 23 South Korea.4.4 2.1 126 Emerging markets Mexico.. 7.3 24 India 1. 1. 11.7 59 Other EM Countries.. 26. 223 EM single country total (4.) (4.) 133.6 662 Emerging markets total (6.4) (6.4) 251.6 858 Equity total (6.5) (6.5) 2,158.7 3,317 [ 8 ]
Fixed Income & Other ETP Flows by Exposure Fixed Income Exposure Jan 215 Flows ($bn) 215 YTD Flows ($bn) Assets ($bn) # ETPs Investment grade 3.8 3.8 12.5 154 Corporate High yield 2.3 2.3 47. 59 Corporate total 6.1 6.1 149.6 213 US Treasury 2.1 2.1 47.9 8 Government Sovereign 1.8 1.8 45.2 261 Government total 3.9 3.9 93.1 341 Broad / aggregate 1.2 1.2 66.4 43 Govt / corporate.5.5 38.8 33 Inflation.3.3 26.1 36 Emerging markets.. 24.4 86 Municipal.6.6 16.1 37 Mortgage (.1) (.1) 9.1 9 Money market.3.3 4.4 19 Other Fixed Income.1.1 14.3 36 Fixed income total 13. 13. 442.2 853 Gold 2.3 2.3 67.5 127 Precious Metals Silver (.1) (.1) 17.9 7 Other (.1) (.1) 9.7 81 Precious metals total 2.2 2.2 95.1 278 Broad market (.3) (.3) 13.1 11 Energy 3.7 3.7 1.8 23 Agriculture (.2) (.2) 3.9 186 Industrial metals (.2) (.2) 1.5 116 Commodities total 5.2 5.2 124.4 893 Alternatives Volatility (.2) (.2) 3.7 47 Other (.) (.) 3. 66 Alternatives total (.2) (.2) 6.7 113 Asset allocation.. 6.2 78 Currency.1.1 4.9 166 Israel ETP.. 33.3 Global ETP total 11.6 11.6 2,776.4 5,42 Commodities Other [ 9 ]
Endnotes The ETP (or exchange traded product) category encompasses any portfolio exposure security that trades intra-day on an exchange. The data for this report are captured from a number of sources by BlackRock including provider websites, fund prospectuses, provider press releases, provider surveys, Bloomberg, the National Stock Exchange, Strategic Insight Simfund, Wind, and the Bank of Israel. All amounts are reported in US dollars. Flows are derived using daily net asset values and shares outstanding using the most recent data we can capture at month-end. For products with cross-listings, we attribute net flows and assets to the primary listings. For Middle East and Africa, net flows data is not available. Assets are derived using shares outstanding and prices at the end of each month (or the closest date available). Where price is not available, we use an approximation. For ETPs listed in Israel, product level detail is not available. Product level information is aggregated by provider, asset class, exposure, region listed and replication method to produce the various analyses in the report. 1. Data is as of January 29, 215 for Europe and January 3, 215 for the US, Canada, Latin America, Israel, and some Asia ETPs. Some Asia ETP data is as of December 3,. Global ETP flows and assets are sourced using shares outstanding and net asset values from Bloomberg for the US, Canada, Europe, Latin America and some ETPs in Asia. Middle East ETP assets are sourced from the Bank of Israel. ETP flows and assets in China are sourced from Wind. Inflows for years prior to 21 are sourced from Strategic Insights Simfund. Asset classifications are assigned by the BlackRock based on product definitions from provider websites and product prospectuses. Other static product information is obtained from provider websites, product prospectuses, provider press releases, and provider surveys. Market returns are sourced from Bloomberg. 2. Bloomberg (SPX US Index) 3. Bloomberg (EURUSD) 4. Bloomberg (DXY Currency) 5. Chicago Board Options Exchange 6. Bloomberg (SPY US Equity) 7. Bloomberg (USGG1YR) Index returns are for illustrative purposes only. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. ABOUT BLACKROCK BlackRock is a leader in investment management, risk management and advisory services for institutional and retail clients worldwide. At December 31,, BlackRock s AUM was $4.652 trillion. BlackRock helps clients meet their goals and overcome challenges with a range of products that include separate accounts, mutual funds, ishares (exchange traded funds), and other pooled investment vehicles. BlackRock also offers risk management, advisory and enterprise investment system services to a broad base of institutional investors through BlackRock Solutions. Headquartered in New York City, as of December 31,, the firm had approximately 12,2 employees in more than 3 countries and a major presence in key global markets, including North and South America, Europe, Asia, Australia and the Middle East and Africa. For additional information, please visit the Company's website at www.blackrock.com. [ 1 ]
Disclaimer NOTICE TO RESIDENTS IN THE UK: BlackRock Advisors (UK) Limited is authorised and regulated by the Financial Conduct Authority ('FCA'), having its registered office at 12 Throgmorton Avenue, London, EC2N 2DL, England, Tel +44 ()2 7743 3. This document has been provided by BlackRock in a private and confidential manner to professional and or institutional investors (as such term is defined according to applicable regulations in the relevant jurisdiction) only upon express request. This document is solely for informational and educational purposes only and represents an assessment of the market environment at a specific time and is not intended to be relied upon by the reader as research, a forecast of future events or a guarantee of future results. This publication does not provide financial, investment or tax advice or information relating to the securities of any particular fund or other issuer. The information and opinions included in this publication are based on publicly available information, are subject to change and should not be relied upon for any purpose other than general information and education. This publication has been prepared without regard to the individual financial circumstances and objectives of those who receive it and the types of securities discussed in this publication may not be suitable for all investors. The information included in this document has been taken from trade and other sources considered to be reliable. This document is published in good faith but no representation or warranty, express or implied, is made by BlackRock or by any person as to its accuracy or completeness and it should not be relied on as such. BlackRock or any of its directors, officers, employees or agents shall have no liability for any loss or damage arising out of the use or reliance on the material provided including without limitation, any loss of profit or any other damage, direct or consequential. Any opinions expressed in this document reflect our analysis at this date and are subject to change. This is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any strategy in any jurisdiction. This document has not been prepared, reviewed or distributed by any broker-dealer affiliate of BlackRock and should not be deemed a product of any such affiliate. BlackRock has not performed any due diligence on products which are not managed by BlackRock and accordingly does not make any remark on their suitability for investment purposes. Past performance is not a guide to future performance. Income is not fixed and may fluctuate. Exposure to foreign currencies can be affected by exchange rate movements. This document or any portion hereof may not be reprinted, sold or redistributed without authorisation from BlackRock Advisors (UK) or its affiliates (together, BlackRock ). TO RESIDENTS IN THE UNITED STATES: This publication has not been prepared, reviewed or distributed by any broker-dealer affiliate of BlackRock and should not be deemed a product of any such affiliate. This publication does not provide financial, investment or tax advice or information relating to the securities of any particular fund or other issuer. The information and opinions included in this publication are based on publicly available information, are subject to change and should not be relied upon for any purpose other than general information and education. This publication has been prepared without regard to the individual financial circumstances and objectives of those who receive it and the types of securities discussed in this publication may not be suitable for all investors. The information included in this document has been taken from trade and other sources considered to be reliable. This document is published in good faith but no representation or warranty, express or implied is made by BlackRock or by any person as to its accuracy or completeness and it should bot be relied on as such. BlackRock or any of its directors, officers, employees or agents shall have no liability for any loss or damage arising out of the use or reliance on the material provided including without limitation, any loss of profit or any other damage, direct or consequential. Any opinions expressed in this document reflect our analysis at this date and are subject to change. This is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any strategy in any jurisdiction. [ 11 ]
Disclaimer (continued) NOTICE TO RESIDENTS IN AUSTRALIA: Issued in Australia by BlackRock Investment Management (Australia) Limited ABN 13 6 165 975, AFSL 23523 ("BlackRock Australia") to institutional investors only. ishares exchange traded funds ( ETFs ) that are made available in Australia are issued by BlackRock Australia, ishares, Inc. ARBN 125 632 279 and ishares Trust ARBN 125 632 411. BlackRock Australia is the local agent and intermediary for ishares ETFs that are issued by ishares, Inc. and ishares Trust. BlackRock Australia is a wholly-owned subsidiary of BlackRock, Inc. (collectively BlackRock ). A Product Disclosure Statement ( PDS ) or prospectus for each ishares ETF that is offered in Australia is available at ishares.com.au. You should read the PDS or prospectus and consider whether an ishares ETF is appropriate for you before deciding to invest. ishares securities trade on ASX at market price (not, net asset value ("NAV")). ishares securities may only be redeemed directly by persons called Authorised Participants. This information is general in nature, and has been prepared without taking into account any individual's objectives, financial situation, or needs. You should seek independent professional legal, financial, taxation, and/or other professional advice before making an investment decision regarding the ishares funds. FOR INVESTORS IN CANADA: The information and opinions herein are provided for informational purposes only, are subject to change and should not be relied upon as the basis for investment decisions. Past performance is not necessarily indicative of future performance. This document is not and should not be construed as a solicitation or offering of units of any funds or other security in any jurisdiction. No part of this publication may be reproduced in any manner without prior written permission of BlackRock Asset Management Canada Limited and/or its affiliates. FOR INVESTORS IN HONG KONG: Some of the funds mentioned herein have not been registered with the Securities and Futures Commission for offering or distribution in Hong Kong. Accordingly, this material may not be circulated or distributed, nor may the funds be offered or sold whether directly or indirectly, to any person in Hong Kong other than to a Professional Investor as defined in the Securities and Futures Ordinance ("SFO") (Cap. 571 of the laws of Hong Kong) and any regulations there under. NOTICE TO RESIDENTS IN INDIA: This document is intended for information purposes only and does not constitute investment advice or an offer to sell or solicitation of an offer to buy the funds described herein. This document has been provided by BlackRock in a private and confidential manner to financial intermediaries only upon their request. The funds mentioned herein have not been registered with any authorities in India. NOTICE TO RESIDENTS IN JAPAN: This document is solely for educational purposes and does not constitute advertisement of financial services targeted at investors in Japan. This document is intended for information purposes only and does not constitute investment advice or an offer to sell or solicitation of an offer to buy the funds described herein. This document has been provided by BlackRock in a private and confidential manner to Qualified Institutional Investors (as defined in the Financial Instruments and Exchange Law of Japan) only upon their request. [ 12 ]
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