European ETFs Attract Robust Inflows

It seems like the Eurozone financial crisis is fading somewhat as billions in new cash inflows head into European exchange traded funds over January.

Investors funneled $3.3 billion into 591 ETFs that covered the European markets, bringing Europe-related ETFs assets under management to $220 billion, reports Simon Jessop for Reuters. Europe equity ETFs attracted the lion’s share of the new inflows, with $2.1 billion in new money or a 1.3% rise month-over-month. [Investors are Exploring with International ETFs: Schwab]

European assets have garnered greater attention since the European Central Bank committed to preserving the euro currency in July 2012, assuaging the markets of any imminent collapse in the financial system.

Markit data revealed that peripheral Eurozone indices benefited the most as investment flows returned to the region after taking the brunt of the hit during the worst of the sovereign debt crisis.

“ETFs in Europe continued to gain traction in 2013. Given the performance of European stock markets, it is not surprising that equity-focused exchange traded products saw the largest inflows,” Len Welter, Director, ETFs at Markit, said in the article.

“Italy’s increasing popularity with investors was the stand out over January with both equity and fixed income ETP seeing large inflows,” Welter added.

Investors have regained their risk appetite, throwing $172 million in new money into European cyclical sectors such as technology, financials and industrials. Meanwhile, defensive sectors, such as health care, food & beverage and utilities, experienced outflows of $130 million.

Europe currency funds also saw a 8.5% rise in total assets over January, led by “long euro” funds. Fixed-income funds that held sovereign debt posted a 1.9% increase in new assets month-over-month.

Some Europe-related ETFs listed in the U.S. include:

• Vanguard MSCI Europe ETF (VGK)

• iShares MSCI EMU Index Fund (EZU)

• SPDR DJ EURO STOXX 50 ETF (FEZ)

• iShares S&P Europe 350 Index Fund (IEZ)

For more information on ETF asset flows, visit our ETF performance Reports category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.