Record-breaking ETF trading as volatility ramps up
Near triple 2019 average
European ETF trading volumes have broken records for the third week in a row as international reactions to the coronavirus continue to drive market volatility.
According to new data from iShares, these volumes reached $120bn in the week beginning 9 March this year, breaking the records set in the week of 24 February ($110bn) and 2 March ($113bn), nearly three times the $44bn weekly average in 2019.
Global equity ETF flows fall over 100%
On the busiest days of trading, European ETFs have comprised roughly 30% of all equity trading, while in fixed income, iShares UCITS fixed income ETFs are trading over 200% higher than the 2019 weekly average.
Since the sell-off began, flows have remained relatively resilient, with a reduction in emerging markets of 25%, a 6% drop in European equity flows and a 4% decline in US equity flows, compared to those seen between 1 October 2019 to 21 February 2020.
US investors having been taking advantage of the dip, with the largest amount of inflows heading to US-listed ETPs, while in EMEA, some $3.9bn of equities and $2bn of fixed income was sold last week, while commodities saw the greatest benefit, with gold ETPs receiving $1.6bn.
Disruption in bond markets has caused a disparity between fixed income ETF prices and the values of their constituent bonds, which iShares has attributed to ETFs being a "leading indicator of market prices" rather than a problem with the structure of the exchange-traded fund.
Redemptions in the passive space have been "orderly" and account for "a fraction of the overall trading that has taken place", while the additional choice of in-kind redemptions help to keep money in the market.
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