Equities lead global ETP flows in 2021 as investors turn away from commodities

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Total inflows into the industry were nearly two times higher than the previous record set in 2020, and equalled the total inflows across both 2019 and 2020 combined.

As the ETP industry continued to reach new heights throughout 2021, equity flows dominated, with investors allocating $983bn of net new cash to the asset class through the investment vehicle – over twice as much a the $424bn seen in 2020.

Inflation-linked ETPs see record inflows in October

BlackRock said: “[Equity] flow levels proved far from uniform throughout the year, with large inflow months often followed by a significant drop in flows in the following month.”

According to the fund giant, US-listed flows accounted for the majority of equity buying with investors adding over $724bn, but 2021 was also a record year for EMEA-listed ETPs with investment to the tune of $138bn, BlackRock noted.

The firm stated: “EMEA-listed equity flow trends were similar to those seen at the global level, with US exposures leading ($48bn), and year-on-year flows into European equities marginally increasing.

“In a sign of international investors driving demand for European equities, flows into US-listed European equity ETPs outpaced flows into EMEA-listed peers, at $16bn vs. $10bn.”

After US equities, which saw increased appetite and accounted for $568bn of overall equity ETP flows in 2021 including a record $84bn added in December, emerging markets equities were the next popular exposure, with inflows hitting $82bn throughout the year.

Active ETPs see assets double since 2020

Emerging market equity flows surpassed the previous record set in 2018.

BlackRock said: “In contrast to 2018, when flows overwhelmingly went into broad EM exposures, buying was relatively evenly split between broad and single country ETPs in 2021.”

Meanwhile, flows into bond ETPs “inched higher” for a third consecutive year, also setting new records, with $273bn flooding into the asset class compared to the $268bn seen in 2020.

But commodities, however, suffered their first year of outflows since 2018 with investors redeeming a net $2.8bn from ETPs investing in the commodities market.

A total of nearly $10bn was pulled out of gold ETPs alone, making it the largest yearly outflows from the precious metal since 2013.