- Highest inflows into US equity ETFs since January
- UCITS ETF market continues to grow at a high level
- Gold price boosts commodity ETFs
Last month's trade agreement between the US and the EU was a significant market event. The general sentiment – that the US largely prevailed in the negotiations – was reflected in the ETF market: "The tend reversal in favour of the US, which began in July, is continuing. ETF investors are once again betting on the US", says Neil Davies, Head of ETF Product and Capital Markets, Europe and APAC at Fidelity International. While levels haven't yet returned to the record highs of late 2024, with equity ETF inflows hitting a seven-month high, the trend is clear. "This comes at the expense of European focused ETFs, where growth has recently slowed. Investors see the US as the winner of the trade dispute and are investing accordingly."
However, when it comes to bond ETFs, Europe remains the region of choice: For 14 consecutive months, more money has flowed into European focused bond products than into US ones. The reasons for this continued attractiveness of European bond ETFs are varied. "One explanation is that the fiscal situation in the US is perceived as worse than in Europe. The resulting pressure on the US dollar makes investing in US bonds less attractive, especially for European investors," says Davies.
Market event of the month: Gold price drives commodity ETFs
"Global commodity ETFs also had a strong month in August. With inflows exceeding USD 2 billion, investors invested above the six-month average. This asset class is almost exclusively driven by developments in gold and silver ETFs. "The gold price rally is also reflected in commodity ETFs. Demand here is above average," says Davies. Fundamentally, this development also reflects market uncertainty. "Gold is considered a crisis metal and for many investors, the last safe haven," adds Davies. Many market participants are unsure about what lies ahead and are reallocating into gold. "I understand that. Volatility is likely to remain high in the coming months," Davies concludes.
