by marlène hassine konqui, head of etf research and kristo ... etf... · decent year for equity...

1For professional clients only*

This document is for the exclusive use of investors acting on their own account and categorised either as “eligible counterparties” or “professional clients” within the meaning of markets in financial instruments directive 2004/39/ce.

Informed Investor: Money Monitor December 2018

By Marlène Hassine Konqui, Head of ETF Research and Kristo Durbaku, ETF Research Analyst

-€192m-€391m

Commodities still suffering

Smart Beta inflows retreat

Net new assets in the European ETF market slowed to €2.5bn in December – well down from the €4bn we saw in November. Equities flows collapsed (-€1.4bn), with US equities recording their first negative month (-€1.7bn) after 19 consecutive months of positive flows and Europe equities still suffering outflows (-€1.5bn). However, emerging equities enjoyed their best month ever (+€2.8bn) and fixed income ETF inflows more than doubled, led by developed and emerging market government bonds (€3.4bn and €1.4bn respectively). Commodities continued their descent.

European ETFs flows decelerate

ETF flows slowed to €2.5bn from €4bn

2018 flows now stand at €45bn €2.5bn

What happened last month?

Fixed income flows surged

-€1.4bn €4.3bn

Equity flows collapsed

Source: Monthly data in EURM from 01/12/2018 to 31/12/2018 Bloomberg, Lyxor. The figures relating to past performances refer to past periods and are not a reliable indicator for future results.Note: This report is based on the data available on 01/12/2018. Asset and flow data may be slightly adjusted as additional data becomes available.



What were the major trends?

Source: Monthly data in EURM from 01/12/2018 to 31/12/2018, Bloomberg, Lyxor. The figures relating to past performances refer to past periods and are not a reliable indicator for future results.

What were the major trends?

Monthly net inflows on European Equity ETFs

Monthly net inflows on European Fixed Income ETFs

Equity flows collapsed

Fixed income flows surged €4.3bn

-€1.4bn

3,409Developed

Market Govies

2,178of wh. Europe

Govies

1,059Emerging MarketGovies

-41High Yield

191Money Market

-459Inflation Linked

-227Coprporate

Bonds

1,048of wh. US

Govies

-4,329Developed

Market Equities

-1,755 of wh. US Equities

-1,481 of wh. Europe

Equities

2,826Emerging Market

Equities

139Global Equities

-28 of wh. World Equities-732

of wh. Asia Pacific Equities

US equities rally stop abruptly

Europe equity still suffering

Emerging equities enjoyed their best month ever

US treasury flows accelerated

Euro government bond flows doubled again

Inflation-linked bonds suffered more outflows

Flows surged into emerging govies



Emerging equity ETFs enjoyed their best month everIn December 2018, emerging market ETFs benefited from low US interest rates, which brought record inflows into all emerging market economies. Before this, emerging markets had suffered particularly from the intensifying trade war between the US and China. The risk is likely to remain in the short term but should

decrease in the medium term as current tight economic conditions are expected to ease later in 2019. This could lead to a new ongoing positive trend for EM ETF flows, especially given the historical correlation that has been observed between emerging market ETF flows and the US10-year yield (see graph).

Special focus

Source: Monthly data from 01/01/2012 to 31/12/2018, Bloomberg, Lyxor Cross Asset Research, Lyxor ETF. The figures relating to past performances refer to past periods and are not a reliable indicator for future results..

Emerging equity ETFs monthly flows vs. US 10Y yield

0

0,5

1

1,5

2

2,5

3

3,5

4

2,500

2,000

1,500

1,000

500

0

500

1,000

1,500

2,000

2,500

3,000EM Equity ETF NNA (rhs)

10y U

S Tr

easu

rity in

%

EM eq

uity N

NA (E

URM)

US 10 year interest rates (Ihs)

Jan-2012

Jul-2012

Jan-2013

Jul-2013

Jan-2014

Jul-2014

Jan-2015

Jul-2015

Jan-2016

Jul-2016

Jan-2017

Jul-2017

Jan-2018

Jan-2019

Jul-2018

€2.8bnRecord inflows

Less tight financial conditions in the US expected for 2019 should support flows into emerging markets equity ETFs

Tighter financial conditions in the US with the taper tantrum in 2013 trigerred strong outflows from EM equities



What does it all mean?

Explore our online analytics toolswww.lyxoretf.co.uk/en/instit/etfresearch/type/monthly-flows

Discover more


Find out whether the money is going to the right place with our Manager Monitor

Read more

Check out our key investment calls with the Latest from Lyxor

Read more

Check out the most relevant big investment idea

Read more

Weak year for fixed income ETFs

Commodity ETFs ended 2018 in

the red

YTD net Inflows on European ETFs by asset class

€45bn

Total AUM is down 0,4% since 2017ETFs on the rise

€633bn

A moderately successful year – in line with long-term average

Total Equities

30,187

Developed Market Equities

21,426 of wh. US Equities

18,698

-2,031of wh.

Asia PacificEquities

-3,442of wh. Europe Equities

-1,564Corporate

bonds

-731High Yield

of wh. World

Equities7,189

Emerging Market Equities

6,010Global

Equities

2,751

Total Fixed

Income

15,110 DevelopedMarketGovies

12,127

of wh. Europe Govies

5,465

130Inflation Linked

of wh.US Govies

5,567 Emerging Market Govies

2,737 598Money Market

-403Commodities

Decent year for Equity ETFs



Appendix: The month in numbersTotal

Equity Equity Emerging MarketDecent year for equity ETFs (€30.2bn) Cumulated monthly NNA on equity ETFs

Fixed income CommoditiesWeak year for fixed income flows Cumulated monthly NNA on fixed income ETFs

European ETFs in December 2018 Net Inflows (EURm)NNA dropped to €2.5bn from €4bn in december Monthly NNA on European ETFs

Moderately successful year for European ETFs Cumulated monthly NNA on European ETFs

Good year for emerging markets equity ETF flows despite fluctuations Cumulated monthly NNA on emerging market equity ETFs

Worst ever year for commodity ETFs Cumulated monthly NNA on commodity ETFs

0 2,000 4,000 6,000 8,000 10,000 16,00012,000 14,000

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Dec-2018

Nov-2018

Jan-2018

Mar-2018

Apr-2018

Fev-2018

13,575

7,871

1,331671

1,140

794

4,258

2,293

5,849

753

4,037

2,479 2015 2016 2017 2018

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec-10,000

10,000

20,000

30,000

40,000

50,000

60,000

70,000 2015 2016 2017 2018

0

5,000

10,000

15,000

20,000

25,000

30,000


2015 2016 2017 2018

-4,000

4,000

6,000

8,000

10,000

-2,000

2,000

0


2015 2016 2017 2018


2015 2016 2017 2018

3,000

3,500

2,500

2,000

-500

1,500

1,000

500

0




Fixed IncomeBest month of the year for fixed income ETFs (€4.3bn inflows) Monthly NNA on fixed income ETFs

CommoditiesFlows into commodity ETFs collapse again Monthly NNA on commodity ETFs

EquityEquity ETFs flows turn negative Monthly NNA on equity ETFs

EM equity ETFs outdo developed peers Monthly NNA on developed vs. emerging markets equity ETFs

DM bonds outdo EM peers again Monthly NNA on developed vs. emerging markets fixed income ETFs

...mainly due to broad commodity ETFs Monthly NNA on broad & precious metals ETFs

0

2,000

-2,000

4,000

6,000

8,000

10,000

12,000

14,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-200

-400

-600

-800

-1,000

0

200

400

800

600

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000 Developed Market Emerging Market

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-1,000

0

800

600

400

200

-600

-800

-200

-400

1,000 Broad Commodities Precious Metals

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-1,000

0

1,000

2,000

3,000

4,000 Developed Market Emerging Market

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

Overview by asset class


0

-1,000

4,000

2,000

3,000

1,000

5,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018



Peripheral Europe equity ETFs rebound wasn’t confirmed Monthly NNA on peripheral Europe equity ETFs

Virtually a flat month for Eurozone equity ETFs Monthly NNA on Eurozone equity ETFs

European EquitiesFlows on European equity ETFs collapse again Monthly NNA on European equity ETFs

5th consecutive positive month for German equity ETFs Monthly NNA on German equity ETFs

Little interest on developed Europe equities Monthly NNA on developed Europe region equity ETFs

Financial Europe equity ETFs plummeted Monthly NNA on financials Europe equity ETFs

Equities


-5,000

-2,000

-3,000

-1,000

0

-4,000

1,000

2,000

3,000

4,000

5,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-100

-200

-300

-500

-400

0

100

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-600

-400

-200

0

400

200

800

600

1,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

4,000

2,000

1,000

3,000

0

-2,000

-1,000

-3,000

-4,000Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

0

500

-500

1,000

-1,000

-1,500

1,500

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

0

1,000

-1,000

2,000

-2,000

-3,000

3,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018



Best month of the year for emerging market equity ETFs Monthly NNA on emerging market equity ETFs

Smart beta ETF flows turn negative after best month ever Monthly NNA on smart beta ETFs

US & Japan equities

Emerging market equities

Smart Beta / Value

US equity ETFs turn largely negative after 19 positive months Monthly NNA on US equity ETFs

Japan equity ETFs collapse again Monthly NNA on Japan equity ETFs

Broad EM equity ETFs enjoyed their best month ever Monthly NNA on broad EM equity ETFs

Value style equity ETFs decline sharply Monthly net new assets on value style equity ETFs

Equities (cont’d)


-2,000

1,000

0

1,000

2,000

3,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

0

1,000

-1,000

-2,000

2,000

3,000

4,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

0

500

1,000

-500

-1,000

2,000

1,500

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-500

0

500

1,000

-1,000

-1,500

-2,000

1,500

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-1,500

500

0

-1,000

-500

1,000

2,000

1,500

2,500

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

400

200

-200

-400

-600

-800

0

-1,000Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018



Inflation-linked bond flows remain negative Monthly NNA on inflation-linked bonds ETFs

HY outflows nearly stopped while IG counterparts turned negative Monthly NNA on investment grade & high yield bond ETFs

European Govies US Govies

Inflation Linked EM debt

Credit Market Short-bond strategy

Best month of the year for EU government bond ETFs (€2.2bn)Monthly NNA on EU government bond ETFs

…and for US treasuries (€1bn) Monthly NNA on US government bond ETFs

Significant inflows into emerging market debt Monthly NNA on emerging market debt ETFs

Short bond strategies rebound wasn’t confirmed Monthly NNA on short bond strategy ETFs

Fixed Income


-600

-400

-200

0

800

600

400

200

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

Investment Grade High Yields

0

-1,500

-1,000

-500

500

1,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-600

-400

400

200

0

-200

600

1,000

800

1,200

-1,000

0

-500

500

1,500

1,000

2,000

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

-500

-300

-400

-200

-100

0

100

200

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

Feb-2018

Mar-2018

Apr-2018

May-2018

Jun-2018

Jul-2018

Aug-2018

Sep-2018

Oct-2018

Nov-2018

Dec-2018

Jan-2018

0

500

1,000

-500

-1,000

2,500

2,000

1,500



Contact [email protected] | +33 (0)1 42 13 59 56

Marlène Hassine KonquiHead of ETF Research+33 1 42 13 59 [email protected]

Kristo DurbakuETF Research Analyst+33 1 57 29 25 [email protected]

Check out theAlpha/Beta Allocator Q3 2018

Read more

Read the full 2017 analysison active and passiveperformance

Read more

ETF Research Team

Analysing active & passive fund performance What 2017 results tell us about portfolio construction

FOR PROFESSIONAL AND QUALIFIED INVESTORS ONLYThis document is reserved and must be given in Switzerland exclusively to Qualified Investors as defined by the Swiss Collective Investment Scheme Act of 23 June 2006 (as amended from time to time, CISA).

LYXOR ETF Research

mailto:[email protected]

mailto:[email protected]

https://www.lyxoretf.fr/pdfDocuments/Q3%20Alpha%20Beta%20Allocator%20FR_3b87abe8e5e708106f1424b6027d3008.pdf

http://www.lyxor.com/uploads/tx_bilyxornews/Lyxor_ETF_Active_Passive_2017_01.pdf



Important informationThis document is of a commercial nature and not of a regulatory nature. It is each investor’s responsibility to ascertain that it is authorised to subscribe, or invest into this product. Prior to investing in the product, investors should seek independent financial, tax, accounting and legal advice.

The indexes and the trademarks used in this document are the intellectual property of index sponsors and/or its licensors. The indexes are used under license from index sponsors. The Funds based on the indexes are in no way sponsored, endorsed, sold or promoted by index sponsors and/ or its licensors and neither index sponsors nor its licensors shall have any liability with respect thereto.

Lyxor UCITS ETFs referred on this document are open ended mutual investment funds (i) established under the French law and approved by the Autorité des Marchés Financiers (the French Financial Markets Authority) or (ii) established under Luxembourg law and approved by the Commission de Surveillance du Secteur Financier (the Luxembourg Financial Markets Authority) (CSSF) and authorized for marketing of their units or shares in various European countries (the Marketing Countries) pursuant to the article 93 of the 2009/65/EC Directive.

Société Générale, Lyxor AM and Lyxor Asset Management Luxembourg recommend that investors read carefully the “risk factors” section of the product’s prospectus and the “Risk and reward” section of the Key Investor Information Document (KIID). The prospectus in French for French Lyxor UCITS ETFs and in English for Luxembourg Lyxor UCITS ETFs and the KIID in the local languages of the Marketing Countries are available free of charge on www.lyxoretf.com or upon request to [email protected].

The attention of investors is drawn to the fact that, the prospectus of Luxembourg Lyxor UCITS ETFs is only available in English.

Updated composition of the product’s investment portfolio is available on www.lyxoretf.com. I ndicative net asset value is published on the Reuters and Bloomberg pages of the products, and might also be mentioned on the websites of the stock exchanges where the product is listed. The products are the object of market- making contracts, the purpose of which is to ensure the liquidity of the products on the exchange, assuming normal market conditions and normally functioning computer systems. Units of a specific UCITS ETF managed by an asset manager and purchased on the secondary market cannot usually be sold directly back to the asset manager itself. Investors must buy and sell units on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units and may receive less than the current net asset value when selling them.

These products include a risk of capital loss. The redemption value of these products may be less than the amount initially invested. In a worst case scenario, investors could sustain the loss of their entire investment.

The indices referred to herein (the “Index”) are not sponsored, approved or sold by Société Générale, Lyxor AM or Lyxor Asset Management Luxembourg. Société Générale, Lyxor AM and Lyxor

Asset Management Luxembourg shall not assume any responsibility in this respect.

The accuracy, completeness or relevance of the information which has been drawn from external sources is not guaranteed although it is drawn from sources reasonably believed to be reliable. Subject to any applicable law, Société Générale, Lyxor AM and Lyxor Asset Management Luxembourg shall not assume any liability in this respect.

The market information displayed in this document is based on data at a given moment and may change from time to time.

This document does not constitute an offer for sale of securities in the United States of America. The product herein described will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) and may not be offered or sold in the United States of America without being registered or being exempted from registration under the U.S. Securities Act. This document does not constitute an offer, or an invitation to make an offer, from Société Générale, Lyxor Asset Management (Lyxor AM) or any of their respective subsidiaries to purchase or sell the product referred to herein.

Société Générale is a French credit institution (bank) authorised by the Autorité de contrôle prudential et de résolution (the French Prudential Control Authority).

Lyxor Asset Management Luxembourg, 18, boulevard Royal L-2449 Luxembourg, is a Luxembourg société anonyme authorized by the Commission de Surveillance du Secteur Financier as management company.

Lyxor International Asset Management (Lyxor AM) is a French investment management company authorized by the Autorité des marchés financiers and placed under the regulations of the UCITS Directive (2009/65/CE).

© COPYRIGHT 2018 LYXOR INTERNATIONAL ASSET MANAGEMENT ALL RIGHTS RESERVED

Notice to UK Investors: This material is issued in the UK by Lyxor Asset Management UK LLP, which is authorized and regulated by the Financial Conduct Authority in the UK under registration number 435658.

Notice to Swiss Investors: This document and the information contained therein do not constitute an issue prospectus according to articles 652a and 1156 of the Swiss Code of Obligations (“CO”) or a listing prospectus according the Listing Rules of the SIX Swiss Exchange. The products are authorized for the offer and distribution in Switzerland or from Switzerland pursuant to the Swiss Federal Act on Collective Investment Schemes (CISA). The Swiss Financial Market Supervisory Authority FINMA has authorized Société Générale, Zurich Branch (Talacker 50, Case postale 1928, 8021 Zürich), to act as Swiss Representative and Paying Agent of the Funds in Switzerland. The product’s documentation (prospectus, KIID, articles of association, annual and semi-annual reports) can be obtained free of charge at the Swiss representative’s office.

Knowing your riskIt is important for potential investors to evaluate the risks described below and in the fund prospectus on our website www.lyxoretf.com

Capital at riskThe capital invested is not guaranteed.

Replication riskThe fund objectives might not be reached due to unexpected events on the underlying markets which will impact the index calculation and the efficient fund replication.

Fund liquidity riskThe fund’s liquidity and/or value may be negatively affected by different factors.

Counterparty riskThe fund may be exposed to the counterparty risk resulting from the use of otc forward financial instruments contracted with a lending institution, or from the use of a securities lending programme.

Currency risk The funds are exposed to currency risk, as they may be denominated in a currency different from the index.

Ref

. 714

438

- S

tudi

o S

ocie

te G

ener

ale

- 01

/201

9


Contact [email protected] | +33 (0)1 42 13 59 56