ETF investors shift to eurozone recovery play

Exchange-traded funds focused on peripheral European countries gained traction in September, with both Spanish and Italian ETFs reporting inflows as investors began to bet on a eurozone recovery.

 

  Net new assets in Italy and Spain-focused funds accounted for nearly 80% of all net inflows in country-specific funds in developed Europe, according to research published on Wednesday by Lyxor Asset Management.

  At the same time, regional ETFs that track European indices saw their fourth straight month of inflows.
Germany-specific ETFs posted outflows of €428m during September and €1.5bn for the year to date.

  Nizam Hamid, head of product line management ETFs at Lyxor, told Financial News: “The German trade last year was the safety move. Now the environment is different.”

  The movement away from German funds resulted in net outflows of €350.2m in products focused on countries in developed Europe.

  Hamid said: “One can see this as being clients moving from the safety of German equities to a play on the broad eurozone recovery.”

  Flows into European regional products continued an upward trajectory that began in June, posting €1.2bn in inflows in September.

  In September, the total volume of assets under management in European exchange-traded products rose to a new high of €266.8bn, according to Lyxor.

  September also marked the fifth consecutive month of inflows for Italian ETFs. The products enjoyed €94.4m in net new assets, representing 48.9% of all net new assets in country-specific ETFs in developed Europe.

  Spanish ETFs saw more modest net new assets of €58m, according to Lyxor, or 30.1% of new country-specific flows.