BlackRock Europe ETF Inflows Slow As Bond Demand Wanes

BlackRock Inc., the world's biggest exchange-traded fund issuer, had inflows into its European ETF range slow in the first quarter as investors turned away from fixed income due to changing U.S. rate cut expectations.

According to data from ETFbook, the world’s largest asset manager captured $15.2 billion inflows last quarter, a 29% market share, taking its overall assets under management in Europe to $830bn.

A record year for fixed income ETFs last year was a key driver behind the firm’s $71 billion in 2023 inflows. The New York-based company commands 45% of the market.

With markets not pricing in as many interest rate cuts from the Federal Reserve this year, demand for fixed income ETFs has waned, especially in the last two months.

After January's $8.4 billion in inflows, and coming off a record 2023, demand slowed to $3.4 billion and $1.3 billion in February and March, respectively.

In particular, the iShares Core S&P 500 UCITS ETF (CSPX) saw $4.8 billion inflows over the quarter, the most across all European-listed ETFs, while investors piled $3.2 billion into the iShares Core MSCI World UCITS ETF (SWDA).

Overall, inflows into exchange-traded products (ETPs) in Europe totaled $52 billion in the first quarter, driven by demand for core US and global equity exposures.

BlackRock, DWS, Vanguard

Closely behind BlackRock were DWS and Vanguard which captured $8.3 billion and $6 billion inflows during the quarter, respectively.

DWS, the former Deutsche Bank unit, had strong demand for its Xtrackers EUR Overnight Rate Swap UCITS ETF (XEON), in particular, which took in $2.1 billion net new assets, the fourth-highest across all ETFs.

Meanwhile, demand for Malvern, Pennsylvania-based Vanguard’s core range remained solid, with $1.5 billion flowing into the Vanguard S&P 500 UCITS ETF (VUSA).

After a year of outflows in 2023, UBS Asset Management posted a strong $3.9 billion inflows alongside Amundi and State Street Global Advisors (SSGA) which captured $5.4 billion and $4 billion net new assets, respectively.

SSGA’s decision to slash fees on its physical S&P 500 UCITS ETF (SPY5) last October has resonated with investors. The ETF saw $3.4 billion inflows in Q1, the second-highest across all ETFs.

JP Morgan Asset Management’s ongoing dominance of the active ETF space helped it secure $3.8 billion inflows over the quarter, driving its overall AUM to $25 billion.

In particular, investors piled a combined $2.1 billion into the JPM US Research Enhanced Index Equity (ESG) UCITS ETF (JREU) and the JPM Global Research Enhanced Index Equity (ESG) UCITS ETF (JGEP).

At the other end of the spectrum, it was a tough quarter for Legal & General Investment Management (LGIM) which suffered $1.5 billion outflows, the most across all ETF issuers.