ETF investors are getting back on the stock market

NAfter an unusually long lull in the summer, investors again had significantly more money in exchange-traded index funds in October (i.e. primarily ETFs) invested. With a total of $111.5 billion, investors poured more than three times as much money into these products in the month as in September. It was the first time since March that monthly net inflows surpassed $100 billion, wealth manager Blackrock, which owns the world’s largest ETF brand iShares, highlighted on Wednesday.

So far, however, the reawakened ETF boom has largely been due to large investors, as Thomas Wiedenmann from the French fund company Amundi emphasizes in an interview with the FAZ. “Inflows from private customers are nowhere near the level they were before the war. A lot of people seem to want to wait for their utility bills first,” says the head of Amundi’s German ETF business. The ETF savings plans, which have become increasingly popular in recent years, continue to be saved very stably, he emphasizes.

“Significant interest rate risk”

He sees one reason in particular for the fact that such large sums are now being invested in ETFs again: “In the summer months, many investors did not know how to position themselves strategically because the prospects for both shares and bonds are fraught with uncertainty were. In the meantime, large investors in particular are beginning to realign their portfolios, which ETFs are also benefiting from.” Many investors are increasingly using ETFs to invest in both stocks and bonds.

Both asset classes posted strong gains in October. According to figures from Amundi, 79.9 billion euros flowed into equity ETFs in October after just 29.6 billion euros in September. EUR 34.2 billion flowed into bond ETFs after only EUR 9.5 billion in the previous month. According to the Amundi figures in October, European investors invested significantly more money in bond ETFs (EUR 6.1 billion) than in stock ETFs (EUR 3.7 billion). Above all index funds on short-dated bonds are in demand, says Wiedenmann: “Since interest rates are expected to continue to rise, there is currently a considerable risk of interest rate changes in long-term bonds.”

Broken down by world region, investors continue to avoid equities from the euro zone in particular, which is likely to be primarily due to the war in Ukraine and its consequences. Since the beginning of the year, investors have withdrawn a total of 10.1 billion euros from euro zone stock ETFs such as the Euro Stoxx 50. In October it was 173 million euros. Since the beginning of the year, EUR 6.2 billion has flowed out of Europe ETFs, which, like the Stoxx Europe 600, also include Great Britain and Switzerland. In October, however, these ETFs again recorded slight inflows of 631 million euros. Much more money flowed into the American stock market: 49.4 billion euros – in October alone. Since the beginning of the year it has been 275 billion euros.

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