Flows into ETPs fell to $22.5bn last month, as US equities saw their second consecutive month of outflows (-$5.5bn), the first successive months of outflows for the sector in five years.
Unlike last month, emerging market equities did not benefit from these outflows, with the sector reporting $600m in inflows for the period.
Instead, European equities were the big winners of the month, seeing $6.3bn in inflows, after having gained $7.3bn the month before.
BlackRock noted that this was a sharp deviation in sentiment from last year, when European equities saw $17bn in outflows throughout 2022, with $1.9bn leaving in Q4.
Overall, equity flows slowed from $33.3bn in January to $8.5bn in February.
Meanwhile, fixed income also saw a moderation, with flows falling from $28.6bn to $12.8bn.
Global investment grade ETPs lost $1.6bn throughout the month, while high yield suffered $6.7bn in outflows. EM debt ETPs also did poorly, seeing $1.5bn in outflows.
US Treasury exposures were the main winner within the sector as rates flows drove the buying within fixed income, increasing to $10.9bn.
Commodities continued to stay steady with $800m in inflows, the second consecutive month for the sector.
Sectors
Looking to sectors, financials saw their first successful month since October, adding $1.4bn throughout the month, compared to flat flows in January.
Industrials ($500m) and technology ($800m) also saw strong inflows, while energy saw its largest outflows since July at $1.8bn.
The healthcare sector experienced its third month of outflows, losing a further $1.4bn in February. However, BlackRock noted that the sector had since $50.2bn of inflows between 2020 and 2022, so the $3.3bn of outflows in 2023 “are a long way from fully unwinding positioning”.
The move from healthcare and energy represents a wider trend of outflows from defensive exposure, with minimum volatility factor ETPs also suffering at $3.7bn in outflows, after losing $3.9bn in January.
Meanwhile, value ETPs have seen a five month streak of success, gaining another $1.1bn in inflows throughout February.
Sustainable ETPs continued at past levels, gaining $5.7bn throughout the month. However, the sector saw a slowdown in Europe, gaining $4.1bn compared to $5.7bn in January, mostly due to lower flows in the fixed income space.
In contrast, the US saw an uptick in flows, from $800m in outflows to $1.5bn in inflows.
Laura Cooper, senior macro strategist for iShares EMEA at BlackRock, said: “February saw US investors continue to head towards European equities, driven by attractive valuations and in fixed income showed appetite for US treasuries, particularly in short duration.
“In Europe, we saw continued allocations to risk, including credit, with short duration euro investment grade credit inflows dominating.”
