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With the first half of the year now behind us, we’re taking the opportunity to review ETF trends from the first 6 months of the year and identify where investors are putting their money. In this article we’ll take a look at ETF performance and flows across equity sectors, geographical regions and bonds, based on data supplied by our friends over at TrackInsight.

ETF Trends by Sector

In spite of some volatility towards the end of the period and considerable outflows in June, the Technology Stocks sector saw the largest segment inflows overall in the first six months of the year. Attracting more than EUR4bn worth of investments over the period, investors were seemingly encouraged by the 10% return of the sector over the period.

The most popular index to track technology performance was the NASDAQ 100 Total Return Index with the PowerShares QQQ ETF enjoying the largest share of assets under management with €46bn.

Technology Stocks ETF

Conversely, it was ETFs linked to Materials Stocks – which include mining stocks, metal refiners, chemical producers and forestry products – that experienced the largest outflows in the first half of the year with nearly €400m leaving the sector.

Top Performers (Jan – Jun 2017)

Biotechnology Stocks11.23%
Leisure Stocks10.87%
Internet Stocks10.71%

Worst performers (Jan – Jun 2017)

Gas Stocks-22.68%
Energy Stocks-16.87%
Retail Stocks-10.37%

ETF Trends by Geographic Region

Broad regional ETF Trends

Global Stocks saw the biggest inflows over the period as investors sought to diversify globally, with almost €46bn invested in 540 ETFs.  Latin American Stocks led the outflows with -€104m as South American heavyweight, Brazil, continued to underperform. Eurozone Stocks ETFs saw the largest proportional inflows with €12.6bn representing a 24% over six months as sentiment improved following the French Elections and positive economic growth figures for the region.

Best Performers

Asian Stocks11.63%
Eurozone Stocks7.66%
Emerging Stocks7.05%

Worst Performers

North American Stocks-2.62%
African Stocks-1.17%
Latin American Stocks1.02%

European ETF Trends

Over in the Eurozone, France was the clear winner in overall inflows with €961m worth of investment flowing into ETFs linked to French Stocks over the period, with the majority of assets being allocated during the Presidential elections as the potential threat of a more disruptive government taking control receded.

France Stocks ETF

Best Performers

Greek Stocks24.31%
Austrian Stocks19.80%
Polish Stocks17.94%

Worst Performers

Russian Stocks-18.01%
Norwegian Stocks-3.79%
UK Stocks1.80%

Asian ETF Trends

In Asia, it was Japanese Stocks ETFs that saw the biggest inflows over the period, totalling nearly €1.87bn. Assets under management at the end of June totalled €44bn, with €17bn tracking the MSCI Daily Net Total Return Japan Index.

Japanese Stocks ETFs

At the other end of the scale, it was Australian stocks ETFs that recorded the largest outflows over the period with investors removing €372m. It is worth noting that Australian stocks were the only country within the Asia segment to achieve a negative performance in the first half of 2017, with investors perhaps uncomfortable with the weighting of poorly performing commodities stocks on the ASX Index.

Best Performers

Korean Stocks17.17%
Taiwanese Stocks12.84%
Hong Kong Stocks11.62%

Worst Performers

Australian Stocks-0.02%
Thai Stocks1.08%
Japanese Stocks1.85%

 

Americas ETF Trends

US Stocks ETFs saw the biggest inflows within the Americas segment with more than €88bn invested as Trump’s promise of tax reform led to positive sentiment to the US indexes.

While Trump’s plan is yet to materialise, sentiment remains and assets under management sit at €1.5tn with the S&P 500 Daily Total Return Index, CRSP U.S. Total Market Total Return Index, S&P 500 Total Return Index, S&P 500 Net Total Return Index and the NASDAQ-100 Total Return Index the five most popular indexes for investors.

US Stocks ETF

Performance

Mexican Stocks13.80%
US Stocks-0.42%
Canadian Stocks-4.38%
Brazilian Stocks-5.53%

 

Bonds ETF Trends

Overall, we have seen big inflows into Bond ETFs in the first half of 2017. However, across the board, performance has been almost exclusively negative with the exception of European Corporate Bonds which achieved growth of 0.46% over the period.

The biggest inflows were reserved for the Developed Bond segment which attracted almost €62m – despite returning a performance of -€4.63% while it was the European Government Bonds that were the only segment to see net outflows over the period, totalling -€16.8m.

It’s worth noting that US Government Bonds recorded the worst performance over the period returning on average -6.20%.

So what do these ETF trends tell us?

Well, despite recording poor performance in the first six months of 2017, Bond ETFs appear to be attracting major inflows. This despite the prospect of increased interest rates, suggesting many investors feel the current equities bull market is coming to an end and reducing their exposure to equities in preparation.

There was, however, still plenty of demand for equities. US Technology based ETFs, French Stocks ETFs and Japanese Stocks ETFs proved the most attractive segments for investors over the period.

Commodities Stocks ETFs have seen the largest outflows in 2017 to date, with the strength of the Dollar hampering performance, encouraging investors to re-allocate their cash elsewhere.

You can find out more about how to invest in ETFs with our Exchange Traded Funds tutorial. If you have any thoughts or questions on ETFs, please feel free to post them on our ETF forum.

Our thanks to the team at TrackInsight for providing the data and graphs necessary for this comprehensive review.

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Michael Morton

Michael has worked within the Financial Industry for more than 20 years. Starting out as a financial analyst, he has extensive experience working with fund management groups and brokerages.

With an interest in Stocks and Shares, Funds, ETFs and Commodities, his investment focus is medium to long term gains, with the objective of financial security on retirement, and building wealth for his young children for their adult life. His broker of choice is Hargreaves Lansdown.

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