By Abhi Mathews CFA and Silvia Nishiguchi MA

Following the largest week-over-week rise in net ETF issuance since early July, ETF demand for the week ending August 17, 2016 continued to strengthen, but at a slower pace. Issuances of Domestic and World Equity ETFs led the way, followed by Taxable Bond ETFs.

Weekly ETF Flows

Net issuance of World and Domestic Equity ETFs for the week ending August 17, 2016 was just over $7 billion, down nearly 28 per cent over the previous week, with much of the slowdown driven by weaker demand for Domestic ETFs.  Domestic ETFs issuance activity posted a 50 per cent drop, after a nearly six-fold increase over the previous period.  Meanwhile, World Equity ETFs continue to gain ground as new issuances were slightly over $3 billion, jumping 75 per cent from the $1.8 billion seen over the previous week.

Net issuance for Fixed Income ETFs (Taxable and Municipal) for the week ending August 17, 2016 was a solid $2.5 billion. However, net issuance remains well below the $6 billion high seen six weeks ago.

After posting $0.8 billion in net ETF issuance the previous week, investor demand for Commodity ETFs lost ground for the week ending August 17, 2016. Redemptions dropped to a 7-week low of approximately $400 million, which is the lowest level on record since early July.

Net Hybrid ETF issuance was approximately to $450 million which was the highest level seen since it peaked in early July.

Overall, investor demand for ETFs has eased to a still healthy $9.4 billion, down from the $14 billion bounce back seen over the previous week.  Signs suggest that the mild moderation in ETFs investor interest is largely due to softness in both Equity and Fixed Income ETFs, with much of the net issuance slowdown driven by more modest demand for Equity ETFs, which currently accounts for 76 per cent of net ETF issuance.

 

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