Europe Monthly ETF Market Review – €3.3bn into DM Equities Amidst Positive Macro Outlook
European ETP Highlights
Global equity markets registered a strong February, especially in Developed Markets (DM), recovering losses from January. Equities in Developed Europe saw the most robust performance where MSCI Europe was up over 7%, driven by improving PMI data, upbeat corporate commentary and expectations of improving credit. The ETF flows observed for February was mostly in-line with market performance except for Emerging Markets (EM) which continued to see outflows despite having a positive monthly performance.
Developed Markets over Emerging Markets continues to play out
In February 2014, global ETPs had a significant turnaround raising total assets to a new high of $2.3 trillion, a 2% increase YTD.
European domiciled ETPs had inflows of +€4.9bn during this period, where ETPs with equity exposure commanded almost 60% of inflows. Having analysed these flows in further detail, we found that DM equities experienced +€3.3bn of inflows while EM equities saw c.-€400mn of outflows which is inline with our strategists preference for DM over EM.
The benefactors within DM equities – Europe
European domiciled ETPs with European equities exposure received +€1.9bn of inflows while exposure to US saw +€0.8bn of inflows. This again supports our Equity View where we are constructive on Europe with a year-end STOXX Europe 600 target of 375..
Southern Europe on the Up
ETFs with exposure to Southern Europe continued to see net inflows since the region saw a sharp turn in PMIs in October 2013. European listed ETFs tracking equities in Spain, Italy, Greece and Portugal experienced average monthly net inflows of over +€300mn since October 2013. This compares to a monthly average of just under +€70mn from Jan 2013 to Oct 2013.
Large flows into Fixed Income ETFs
Investors trading European listed instruments exercised caution by channelling +€1.9bn into fixed income assets amidst weak data coming out of China. An Emerging Markets Bond ETF (SEMB LN) was the biggest benefactor of this inflow.
Europe Monthly ETF Market Review – €3.3bn into DM Equities Amidst Positive Macro Outlook
Global Disclaimer
The information and opinions in th is report were prepared by Deutsche Bank AG or one of its affiliates (collectively ”Deutsche Bank”). The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. Deutsche Bank makes no representation as to the accuracy or completeness of such information.
Deutsche Bank may engage in securities transactions, on a proprietary basis or otherwise, in a manner inconsistent with the view taken in this research report. In addition, others within Deutsche Bank, includingstrategists and sales staff, may take a view that is inconsistent with that taken in this research report.
Deutsche Bank may be an issuer, advisor, manager, distributor or administrator of, or provide other services to, an ETF included in this report, for which it receives compensation.
Opinions, estimates and projections in this report constitute the current judgement of the author as of the date of this report. They do not necessarily reflect the opinions of Deutsche Bank and are subject to change without notice. Deutsche Bank has no obligation to update, modify or amend this report or to otherwise notify a recipient there of in the event that any opinion, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Prices and availability of financial instruments are subject to change without notice. This report is provided for informational purposes only. It is not an offer or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. Target prices are inherent ly imprecise and a product of the analyst judgement.
As a result of Deutsche Bank’s March 2010 acquisition of BHF-Bank AG, a security may be covered by more than one analyst within the Deutsche Bank group. Each of these analysts may use differing methodologies to value the security; as a result, the recommendations may differ and the price targets and estimates of each may vary widely.
In August 2009, Deutsche Bank instituted a new policy whereby analysts may choose not to set or maintain a target price of certain issuers under coverage with a Hold rating. In particular, this will typically occur for ”Hold” rated stocks having a market cap smaller than most other companies in its sector or region. We believe that such policy will allow us to make best use of our resources. Please visit our website at http://gm.db.com to determine the target price of any stock.
The financial instruments discussed in this report may not be suitable for all investors and investors must make their own informed investment decisions. Stock transactions can lead to losses as a result of price fluctuations and other factors. If a financial instrument is denominated in a currency other than an investor’s currency, a cha nge in exchange rates may adversely affect the investment.
All prices are those current at the end of the previous trading session unless otherwise indicated. Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from DeutscheBank and subject companies.
Past performance is not necessarily indicative of future results. Deutsche Bank may with respect to securities covered by this report, sell to or buy from customers on a principal basis, and consider this report in deciding to trade on a proprietary basis. Derivative transactions involve numerous risks including, among others, market, counterparty default and illiquidity risk. The appropriateness or otherwise of these products for use by investors is dependent on the investors’ own circumstances including their tax position, their regulatory environment and the nature of their other assets and liabilities and as such investors should take expert legal and financial advice before entering into any transaction similar to or inspired by the contents of this publication. Trading in options involves risk and is not suitable for all in vestors. Prior to buying or selling an option investors must review the ”Characteristics and Risks of Standardized Options,” at http://www.theocc.com/component s/docs/riskstoc.pdf If you are unable to access the website please contact Deutsche Bank AG at +1 (212) 250-7994, for a copy of this important document.
The risk of loss in futures trading and options, foreign or domestic, can be substantial. As a result of the high degree of leverage obtainable in futures and options trading, losses may be incurred that are greater than the amount of funds initially deposited.
Unless governing law provides otherwise, all transactions should be executed through the Deutsche Bank entity in the investor’s home jurisdiction. In the U.S. this report is approved and/or distributed by Deutsche Bank Securities Inc., a member of the NYSE, the NASD, NFA and SIPC. In Germany this report is approved and/or communicated by Deutsche Bank AG Frankfurt authorized by the BaFin. In the United Kingdom this report is approved and/or communicated by Deutsche Bank AG London, a member of the London Stock Exchange and regulated by the Financial Conduct Authority for the conduct of investment business in the UK and authorized by the BaFin. This report is distributed in Hong Kong by Deutsche Bank AG, Hong Kong Branch, in Korea by Deutsche Securities Korea Co. This report is distributed in Singapore by Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch (One Raffles Quay #18-00 South Tower Singapore 048583, + 65 6423 8001), and recipients in Singapore of this report are to contact Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch in respect of any matters arising from, or in connection with, this report. Where this report is issued or promulgated in Singapore to a person who is not an accredited investor, expert investor or in stitutional invest or (as defined in the applicable Singapore laws and regulations), Deutsche Bank AG, Singapore Branch or Deutsche Securities Asia Limited, Singapore Branch accepts legal responsibility to such person for the contents of this report. In Japan this report is approved and/or distributed by Deutsche Securities Inc. The information contained in this report does not constitute the provision of investment advice.
In Australia, retail clients should obtain a copy of a Product Disclosure Statement (PDS) relating to any financial product referred to in this report and consider the PDS before making any decision about whether to acquire the product. Deutsche Bank AG Johannesburg is incorporated in the Federal Republic of Germany (Branch Register Number in South Africa: 1998/003298/10). Additional information relative to securities, other financial products or issuers discussed in this report is available upon request. This report may not be reproduced, distributed or published by any person for any purpose without Deutsche Bank’s prior written consent. Please cite source when quoting.
Copyright © 2014 Deutsche Bank