Fixed Income assets saw strong momentum in September

stock-graphic-600x450By Stephanie Tsui

Despite of the volatility in global equity markets, global  Exchange Traded Products (ETPs) maintained strong momentum in September, gathering $28.4bn. This is mainly attributed to the Fed’s decision of holding rates unchanged, according to a recent report by BlackRock.

According to the report, Fixed Income ETPs were the best performer in September, drawing in $11.6bn in total. It is fueled by short maturity funds that are less-impacted by rising rates, which has already gathered more than double 2014’s year-to-date flows. Within the category, treasury funds dominated by contributing around 40% of the total amount.

Investment grade corporate bond funds are also stars of September, which recorded $1.4bn of inflows, rebounding from outflows last month, as investors’ appetite for credit risk stabilized. “The higher yield on these funds can also help mitigate the impact of rising rates because of the higher income they generate relative to Treasuries.” The report noted.

With regard to the equity markets category, the developed world was seeing outperforming the emerging markets. Benefiting from its relative stability in global markets, the US equity topped the list, which drew in $11.2bn across large and small-cap funds. It is followed by Japan equity’s $6.2bn, since investors continue to be encouraged by the promise of further corporate governance reform measures. Meanwhile, Pan-European equity also recorded considerable inflows of $2.8bn, as the European economy data continue to come in strong, BlackRock said.

On the contrary, Emerging Market equity, Commodity funds and High yield corporate bond funds were at the bottom in September, shedding $3.2bn in total. BlackRock pointed out that it is because while the Chinese economic data continued to be disappointing, falling global growth expectations and slumping energy prices added to the threats that these categories have to face. BM