The global ETF industry enjoyed overall inflows (+$178.1 bn) for July 2024 and (+812.1 bn) for the year so far, according to the LSEG Lipper: Global ETF Industry Review - July 2024.
ETFs domiciled in the US enjoyed the highest inflows (+$135.9 bn) for the month, followed by ETFs domiciled in Ireland (+$16.7 bn) and Taiwan (+$8.0bn).
Equity ETFs (+$99.6 bn) enjoyed the highest estimated net inflows for the month, followed by bond ETFs (+$54.3 bn) and alternatives ETFs (+$17.1bn).
The best-selling Lipper global classification for July 2024 was Equity U.S. (+$62.3 bn), followed by Alternative Currency Strategies (+$14.4 bn) and Bond USD Corporates (+$9.7 bn).
ESG-related ETFs enjoyed inflows (+$6.4 bn) over the course of July.
BlackRock was the best-selling ETF promoter globally for July (+$35.6 bn). It was followed by Vanguard (+$35.2 bn) and State Street Global Advisors (+$29.2 bn).
Active/Semi Active ETFs enjoyed inflows (+$27.8 bn) for the month.
In its general overview, the report said that while these inflows occurred in a positive market environment, equity markets nevertheless looked somewhat vulnerable given the high valuations of the market leaders.
"With regard to this, it is not surprising that investors are nervous and reacting quite fast on any news that may impact the current market environment negatively.
"This is not only true for economic news, as the geopolitical tensions in the Middle East, especially the developments
around the Red Sea, are seen as a risk for the general economic growth in Western countries since a number of
shipping companies these days avoid the passage of the Suez channel. It is, therefore, to be expected that prolonged
delivery times will cause some tensions for the still vulnerable delivery chains."
The overview continued: "Market sentiment was further driven by hopes that central banks will start to lower key interest rates. While the European Central Bank (ECB) and the Bank of England (BoE) started to lower interest rates, it is still unclear if and when the U.S. Federal Reserve will start to lower the interest rates in the U.S.
"That said, the latest statements from the U.S. Fed on its expectations for the start of lowering interest rates might have caught some investors on the wrong foot since the central bank indicated that it may start the lowering of interest rates later and with less steps in 2024 than some investors expected. These statements might have impacted the estimated net flows in bond and money market ETFs.
"As a result, some investors may have reviewed their expectations for bonds, as there is the risk that inflation in the
major economies might be more sticky than expected and central banks are held responsible to reach their inflation
targets.
"Additionally, there are still some concerns about the possibility of a recession in the U.S. and other major
economies around the globe. These fears have been raised by a lack of growth in some economies and the long
term inverted yield curves which are seen as an early indicator for a possible recession. The normalization of inverted
yield curves might be another short-term challenge for the bond markets."
The report further said: "From an ETF industry perspective, the performance of the underlying markets led, in combination with the estimated net flows, to increasing assets under management (from $13,055.2 bn as of June 30, 2024, to $13,162.3 bn at the end of July). At a closer look, the increase in assets under management of $107.1 bn for July was driven by estimated net inflows (+$178.1 bn), while the on average negative performance of the underlying markets contributes -$71.0 bn to the growth of the assets under management.
"Looking at the different product types, the promoters of ETFs (+$164.0 bn) and the promoters of structured notes (+$14.1 bn) enjoyed estimated net inflows over the course of July 2024.
"That said, a more detailed view on the estimated net flows by region shows that the fund flows trend were not
consistent for all regions as some ETF domiciles faced outflows over the course of July 2024."
