null

Industry Voice: Vanguard ETF market review - inflows fall in May

European-domiciled ETF total net inflows fell by around 46% in May

clock • 11 min read
Industry Voice: Vanguard ETF market review - inflows fall in May

Flows into European-domiciled ETFs were positive in May despite total net monthly inflows falling by around 46% to $8.2 billion1. Fixed income ($5.5 billion) and equity ($2.9 billion) products attracted the majority of net new assets, while flows into alternatives ETFs were broadly flat ($7 million) and commodity ETFs saw net outflows of -$283 million.

Within equities, sustainable equity ETFs were the largest contributor in May, generating $2.9 billion in net inflows. The bulk of inflows in this category were spread across world ($898 million), United States ($586 million) and emerging market ($477 million) products, while France (-$167 million) and China (-$52 million) ETFs accounted for the largest outflows. Core exposures were the second-most popular equity ETF category with net inflows of $1.1 billion, which were primarily driven by new investments into world ($1.3 billion), and emerging market ($409 million) exposures, while Switzerland (-$890 million) and Germany (-$436 million) products detracted. ‘Market access'2 equity ETFs also saw investor demand in May, recording $315 million of net inflows, with Brazil ($202 million) and China ($91 million) products the largest contributors to flows. Equity sector strategies saw -$631 million of net outflows in May, driven mainly by net outflows from Europe exposures (-$613 million). The equity segment category experienced net outflows of -$409 million, with net outflows from United States (-$195 million) and Germany (-$127 million) products suffering the largest outflows. 

In fixed income, government ($2.4 billion), corporate ($1.4 billion) and ultra-short maturity ($1.2 billion) ETFs contributed the most to net fixed income inflows of $5.5 billion, while floating-rate (-$449 million) and inflation-linked (-$103 million) bond exposures continued to detract from total flows. Within government bond ETFs, eurozone ($1.2 billion) and United States ($1.0 billion) exposures led the inflows. Eurozone and United States exposures were the main drivers of corporate inflows as well, with $1.3 billion and $505 million of net new assets raised, respectively. Within the ultra-short maturity bond ETF category, eurozone products ($733 million) contributed the most to net inflows, while in the floating-rate category, eurozone products (-$266 million) led net outflows which totalled -$449 million.

Commodity ETFs saw net outflows of -$283 million, led by outflows from precious metals ($-136 million) and ex-agriculture (-$86 million) exposures. 

Vanguard UCITS ETFs

In May, the Vanguard UCITS ETF range captured net inflows of $1.1 billion, with the majority of Vanguard UCITS ETFs recording positive flows. Flows were split between Vanguard's fixed income UCITS ETF range ($644 million) and equity UCITS ETF range ($440 million). 

In equities, inflows were led by the Vanguard FTSE All-World UCITS ETF ($200 million) followed by the Vanguard FTSE Japan UCITS ETF ($92 million). 

In fixed income, the primary drivers of inflows were the Vanguard U.S. Treasury 0-1 years UCITS ETF ($288 million), followed by the Vanguard EUR Eurozone Government Bond UCITS ETF ($82 million). In the ESG category, our ETF products recorded inflows for $38 million over the month, primarily driven by Vanguard ESG Global Corporate Bond UCITS ETF ($18 million).

 

This post is funded by Vanguard

1 Source: ETFbook, as at 31 May 2023.

2 Source: ETFbook, as at 31 May 2023. The ‘market access' category includes difficult-to-access markets such as emerging markets.


Important risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Some funds invest in emerging markets which can be more volatile than more established markets. As a result the value of your investment may rise or fall.

Investments in smaller companies may be more volatile than investments in well-established blue chip companies.

ETF shares can be bought or sold only through a broker. Investing in ETFs entails stockbroker commission and a bid- offer spread which should be considered fully before investing.

Funds investing in fixed interest securities carry the risk of default on repayment and erosion of the capital value of your investment and the level of income may fluctuate. Movements in interest rates are likely to affect the capital value of fixed interest securities. Corporate bonds may provide higher yields but as such may carry greater credit risk increasing the risk of default on repayment and erosion of the capital value of your investment. The level of income may fluctuate and movements in interest rates are likely to affect the capital value of bonds.

The Funds may use derivatives in order to reduce risk or cost and/or generate extra income or growth. The use of derivatives could increase or reduce exposure to underlying assets and result in greater fluctuations of the Fund's net asset value. A derivative is a financial contract whose value is based on the value of a financial asset (such as a share, bond, or currency) or a market index.

Some funds invest in securities which are denominated in different currencies. Movements in currency exchange rates can affect the return of investments.

For further information on risks please see the "Risk Factors" section of the prospectus on our website.

Important information

This is a marketing communication.
For professional investors only (as defined under the MiFID II Directive) investing for their own account (including management companies (fund of funds) and professional clients investing on behalf of their discretionary clients). In Switzerland for professional investors only. Not to be distributed to the public.

For further information on the fund's investment policies and risks, please refer to the prospectus of the UCITS and to the KIID (for UK, Channel Islands, Isle of Man investors) and to the KID (for European investors) before making any final investment decisions. The KIID and KID for this fund are available in local languages, alongside the prospectus via Vanguard's website.

The information contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document is general in nature and does not constitute legal, tax, or investment advice. Potential investors are urged to consult their professional advisers on the implications of making an investment in, holding or disposing of [units/shares] of, and the receipt of distribution from any investment.

For Swiss professional investors: Potential investors will not benefit from the protection of the FinSA on assessing appropriateness and suitability.

Vanguard Funds plc has been authorised by the Central Bank of Ireland as a UCITS and has been registered for public distribution in certain EEA countries and the UK. Prospective investors are referred to the Funds' prospectus for further information. Prospective investors are also urged to consult their own professional advisers on the implications of making an investment in, and holding or disposing shares of the Funds and the receipt of distributions with respect to such shares under the law of the countries in which they are liable to taxation.

The Manager of Vanguard Funds plc is Vanguard Group (Ireland) Limited. Vanguard Asset Management, Limited is a distributor for Vanguard Funds plc.

For Swiss professional investors: The Manager of Vanguard Funds plc is Vanguard Group (Ireland) Limited. Vanguard Investments Switzerland GmbH is a financial services provider, providing services in the form of purchase and sales according to Art. 3 (c)(1) FinSA. Vanguard Investments Switzerland GmbH will not perform any appropriateness or suitability assessment. Furthermore, Vanguard Investments Switzerland GmbH does not provide any services in the form of advice. Vanguard Funds Series plc has been authorised by the Central Bank of Ireland as a UCITS. Prospective investors are referred to the Funds' prospectus for further information. Prospective investors are also urged to consult their own professional advisors on the implications of making an investment in, and holding or disposing shares of the Funds and the receipt of distributions with respect to such shares under the law of the countries in which they are liable to taxation.

Vanguard Funds plc has been approved for offer in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA). The information provided herein does not constitute an offer of Vanguard Funds plc in Switzerland pursuant to FinSA and its implementing ordinance. This is solely an advertisement pursuant to FinSA and its implementing ordinance for Vanguard Funds plc. The Representative and the Paying Agent in Switzerland is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich. Copies of the Articles of Incorporation, KIID, Prospectus, Declaration of Trust, By-Laws, Annual Report and Semiannual Report for these funds can be obtained free of charge from the Swiss Representative or from Vanguard Investments Switzerland GmbH via our website.

The Manager of the Ireland domiciled funds may determine to terminate any arrangements made for marketing the shares in one or more jurisdictions in accordance with the UCITS Directive, as may be amended from time-to-time.

The Indicative Net Asset Value ("iNAV") for Vanguard's ETFs is published on Bloomberg or Reuters.  Refer to the Portfolio Holdings Policy at https://fund-docs.vanguard.com/portfolio-holdings-disclosure-policy.pdf.

For investors in Ireland-domiciled funds, a summary of investor rights can be obtained via https://www.ie.vanguard/content/dam/intl/europe/documents/en/vanguard-investors-rights-summary-irish-funds-jan22.pdf and is available in English, German, French, Spanish, Dutch and Italian.

The Central Bank of Ireland has granted authorisation for the Vanguard USD Treasury Bond 0-1 UCITS ETF to invest up to 100% of net assets in different Transferable Securities and Money Market Instruments issued or guaranteed by any EU Member State, its local authorities, non-EU Member States or public international bodies of which one or more EU Member States are members.  Vanguard USD Treasury Bond 0-1 UCITS ETF more than 35% of its scheme property in transferable securities and money market instruments issued or guaranteed by the US. 

London Stock Exchange Group companies include FTSE International Limited ("FTSE"), Frank Russell Company ("Russell"), MTS Next Limited ("MTS"), and FTSE TMX Global Debt Capital Markets Inc. ("FTSE TMX"). All rights reserved. "FTSE®", "Russell®", "MTS®", "FTSE TMX®" and "FTSE Russell" and other service marks and trademarks related to the FTSE or Russell indexes are trademarks of the London Stock Exchange Group companies and are used by FTSE, MTS, FTSE TMX and Russell under licence. All information is provided for information purposes only. No responsibility or liability can be accepted by the London Stock Exchange Group companies nor its licensors for any errors or for any loss from use of this publication. Neither the London Stock Exchange Group companies nor any of its licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the FTSE or Russell indexes or the fitness or suitability of the indexes for any particular purpose to which they might be put.

BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. Bloomberg Finance L.P. and its affiliates, including Bloomberg Index Services Limited ("BISL") (collectively, "Bloomberg"), or Bloomberg's licensors own all proprietary rights in the Bloomberg Indices. The products are not sponsored, endorsed, issued, sold or promoted by "Bloomberg." Bloomberg makes no representation or warranty, express or implied, to the owners or purchasers of the products or any member of the public regarding the advisability of investing in securities generally or in the products particularly or the ability of the Bloomberg Indices to track general bond market performance. Bloomberg shall not pass on the legality or suitability of the products with respect to any person or entity. Bloomberg's only relationship to Vanguard and the products are the licensing of the Bloomberg Indices which are determined, composed and calculated by BISL without regard to Vanguard or the products or any owners or purchasers of the products. Bloomberg has no obligation to take the needs of the products or the owners of the products into consideration in determining, composing or calculating the Bloomberg Indices. Bloomberg shall not be responsible for and has not participated in the determination of the timing of, prices at, or quantities of the products to be issued. Bloomberg shall not have any obligation or liability in connection with the administration, marketing or trading of the products.

BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. MSCI is a trademark and service mark of MSCI Inc. (collectively with its affiliates, "MSCI"), used under license. Bloomberg Finance L.P. and its affiliates (collectively, "Bloomberg"), including Bloomberg Index Services Limited, the index administrator ("BISL"), or Bloomberg's licensors, including MSCI, own all proprietary rights in the indices mentioned. Neither Bloomberg nor MSCI is affiliated with Vanguard and neither Bloomberg nor MSCI approves, endorses, reviews or recommends any Vanguard funds mentioned. Neither Bloomberg nor MSCI guarantees the timeliness, accurateness or completeness of any data or information relating to the indices mentioned and none shall be liable in any way to Vanguard, investors in Vanguard funds or other third parties in respect of the use or accuracy of the Bloomberg indices or any data included therein.

For Dutch investors only: The fund(s) referred to in this document are listed in the AFM register as defined in section 1:107 Dutch Financial Supervision Act (Wet op het financieel toezicht).For details of the Risk indicator for each fund listed in this document, please see the fact sheet(s) which are available from Vanguard via our website https://www.nl.vanguard/professional/product.

Issued in EEA by Vanguard Group (Ireland) Limited which is regulated in Ireland by the Central Bank of Ireland
Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.
Issued in Switzerland by Vanguard Investments Switzerland GmbH.

© 2023 Vanguard Group (Ireland) Limited. All rights reserved.
© 2023 Vanguard Asset Management, Limited. All rights reserved.
© 2023 Vanguard Investments Switzerland GmbH. All rights reserved.

More on Industry Voice

Event Voice: UK Equities - Your questions answered...

Event Voice: UK Equities - Your questions answered...

Ed Legget, Fund Manager, Artemis Fund Managers
clock 16 January 2024 • 5 min read
Event Voice: Your questions answered by Zennor at the Japan Market Focus Event

Event Voice: Your questions answered by Zennor at the Japan Market Focus Event

David Mitchinson, Portfolio Manager, Zennor Asset Management
clock 09 October 2023 • 3 min read
Event Voice: Your questions answered by PIMCO at the Fund Selector Focus Event

Event Voice: Your questions answered by PIMCO at the Fund Selector Focus Event

With proper positioning, today’s bond market may offer the potential for equity-like returns with less risk. PIMCO Fixed Income Strategist Gordon Harding explains how the PIMCO GIS Income strategy is positioned to seek higher yields and the potential...

Gordon Harding Vice President, Fixed Income Strategist
clock 05 October 2023 • 7 min read
Trustpilot