Lyxor’s Marlene Hassine Konqui
The UK was the surprise leader for individual country inflows while ESG ETFs saw another record-breaking month, according to Lyxor’s Money Monitor for October.
The “lion’s share” of equity flows for individual countries, which amounted to €2.6bn in total throughout October, went to the UK at €2.3bn as “developments” in the Brexit saga meant investors “progressively downplayed” the prospects of a no-deal.
Ruffer ups UK equity exposure as ‘storm clouds’ clear
The report concluded that investors have identified a “reasonable entry point” after three years of “wasteful ‘wait and see'”.
October inflows for ESG ETFs reached €1.9bn, which brought the year-to-date total to €11.7bn in another record-breaking month for the asset class.
European ETFs continued to see steady inflows and gathered €10.7bn during the month, primarily driven by equities (€5.3bn) and fixed income (€2.7bn).
Elsewhere, commodities saw inflows of €229m and smart beta ETFs inflows remained steady at €492m.
October marked the first time in 2019 that equities saw “two successive positive months”, which Lyxor suggested shows equity ETF inflows getting “back on track”.
Despite October being “one of the most eventful months in post-war UK politics”, investors have responded “constructively”, according to the report.
It added there were “three key elements” that prompted the downplay of a no-deal outcome: the House of Commons’ vote in favour of the Brexit bill, the disagreement over the short period given to discuss it, and the eventual request of an extension.
However, the General Election on 12 December could have consequences “well beyond the short-term implications of Brexit”, according to Marlene Hassine Konqui, head of ETF research at Lyxor, while “uncertainty still prevails” in currency and equity markets.