Industry Voice: Vanguard ETF market review - inflows accelerate in March

European-domiciled ETF flows moved further into positive territory in March as total net monthly inflows increased by around 65% compared with the previous month¹. The ETF market saw inflows of $15.3 billion in March, with equity ($8.6 billion) and fixed income ($6.5 billion) ETFs accounting for the lion's share of positive flows. Commodities products ($264 million) also experienced positive flows, while alternatives ETFs (-$48 million) suffered outflows for the month.

Within equities, core strategies remained the largest contributor to inflows in March, taking in $5.8 billion of inflows. Of this, United States ($2.7 billion), emerging market ($2.3 billion) and world ($1.5 billion) exposures were the largest beneficiaries of inflows, while eurozone (-$529 million) and Canada (-$568 million) strategies accounted for the greatest outflows.

Sustainable equity ETF exposures were again the second-most popular category, garnering $1.4 billion of new assets, driven primarily by emerging market ($789 million), United States ($515 million), Japan ($360 million) and Asia Pacific ex-Japan ($331 million) exposures. These positive flows were in part offset by outflows from global sustainable equity ETF exposures (-$1.2 billion). Segment² ETFs recorded moderate inflows, with $444 million added across markets, with world ($180 million) and Switzerland ($103 million) the leading contributors. UK segment ETF exposures, meanwhile, saw -$106 million of outflows.

In fixed income, total inflows of $6.5 billion were primarily driven by government ($3.6 billion) and ultra-short maturity ($2.5 billion) bond ETFs, while inflation-linked (-$304 million) and floating-rate (-$660 million) fixed income exposures saw outflows. Within government bond ETFs, eurozone ($2.6 billion) and United States ($527 million) exposures were the main drivers of inflows. United States exposures ($1.2 billion) led the inflows into ultra-short maturity bond ETFs, followed by eurozone strategies ($897 million). United States ETFs (-$646 million) led the outflows from floating-rate bond exposures, while eurozone exposures (-$281 million) were the primary driver of outflows from inflation-linked exposures.

Commodity ETFs saw inflows of $264 million during March, mainly fuelled by inflows into broad commodity exposures ($541 million). Precious metals (-$121 million) and ex-agriculture (-$152 million) exposures both saw outflows in March.

Vanguard UCITS ETFs

In March, the Vanguard UCITS ETF range captured net inflows of $1.8 billion, with the majority of Vanguard UCITS ETFs recording positive flows. Flows were split between Vanguard's equity UCITS ETF range ($945 million) and fixed income UCITS ETF range ($849 million).

In equities, inflows were led by the Vanguard FTSE All-World UCITS ETF ($376 million), followed by the Vanguard S&P 500 UCITS ETF ($289 million) and the Vanguard FTSE Developed Asia Pacific ex Japan UCITS ETF ($130 million).

In fixed income, the primary drivers of inflows were the Vanguard U.S. Treasury 0-1 Year Bond UCITS ETF ($510 million), followed by the Vanguard EUR Corporate Bond UCITS ETF ($144 million). In the ESG category, the Vanguard ESG Global All Cap UCITS ETF added $19 million in assets over the month.

This post is funded by Vanguard

¹ Source: ETFbook, as at 31 March 2023.
² Source: ETFbook, as at 31 March 2023. The ‘segment' category includes equity exposures which target specific market capitalisation segments, such as small-cap, mid-cap and large-cap.

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