Vanguard European ETF market review: European-domiciled ETFs saw their twenty-first consecutive month of inflows, recording $10.8 billion of new fund assets in December. For the full year, total inflows were over $193 billion in 20211.
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Vanguard European ETF market review December 2021
Highlights
Equity ETFs captured $5.0 billion of net cash flows in December, down from the $10.3 billion of inflows seen in November. Equity ETFs were the largest contributor to total ETF flows in 2021, with $139 billion.
Fixed income ETF flows maintained their momentum in December with $4.7 billion of inflows, compared with the $5.3 billion of flows received the previous month. For the full year, fixed income ETFs attracted $43 billion in assets.
European-domiciled ETF inflows slowed in December ($10.8 billion) relative to the previous month ($16.1 billion). Market flows were relatively evenly spread between equity and fixed income strategies, at $5.0 billion and $4.7 billion respectively. Commodity ETFs saw inflows of $1.0 billion in December, after suffering outflows of -$158 million in November.
For the year overall, European-domiciled ETFs recorded $193 billion in inflows in 2021, equivalent to an average monthly pace of $16 billion. More than 70% of new fund assets were captured by equity ETFs ($139 billion), with fixed income gaining $43 billion.
Within equities, sustainable exposures again led the inflows in December, taking in nearly $10.0 billion, with United States ($4.5 billion), Europe ($1.9 billion) and world ($1.8 billion) exposures the most popular. Thematic exposures were a distant second, taking in $0.7 billion, with global exposures registering the majority of inflows, while China exposures detracted slightly. Core ETF exposures suffered outflows of $3.1 billion in December, more than offsetting the inflows of $2.9 billion of the previous month. Among core ETF strategies, global (-$2.4 billion), Japan (-$0.7 billion) and emerging market (-$0.7 billion) exposures all saw outflows, while United States ($1.9 billion) and Europe ex-UK ($0.6 billion) strategies experienced inflows. Smart beta was the second-largest detractor, with negative flows of -$1.1 billion, as world (-$0.6 billion) and Europe (-$0.5 billion) exposures saw the largest outflows.
In fixed income, government, corporate and aggregate bond ETFs were the largest contributors to fixed income ETF inflows of $4.7 billion, contributing $2.4 billion, $1.5 billion and $1.1 billion respectively. Within government bonds, US Treasury ETF strategies proved popular with investors in December ($1.8 billion), followed by emerging market sovereign debt ($0.6 billion) and Japanese government bond ($0.5 billion) ETFs. Chinese sovereign debt saw outflows of $0.6 billion in December. Corporate bond ETF inflows were primarily driven by Europe ($1.1 billion) and US ($0.5 billion) exposures. Within the aggregate bond segment, global and US exposures saw the largest inflows, with $0.5 billion and $0.4 billion respectively. High-yield ETF exposures suffered net outflows of $0.5 billion, with US (-$0.4 billion) and eurozone (-$0.2 billion) strategies experiencing the largest outflows, while Asia ex-Japan high-yield ETFs saw $90 million in inflows.
Commodity ETFs garnered $1.0 billion of assets in December, as inflows of $1.2 billion into broad exposures were offset by outflows of -$0.2 billion from precious metals ETFs.
Vanguard UCITS ETFs
In December, the Vanguard UCITS ETF range captured net inflows of approximately $478 million, primarily driven by inflows into the equity ($501 million) and multi-asset ($47 million) ranges. In equity, the Vanguard S&P 500 UCITS ETF and the Vanguard FTSE All-World UCITS ETF registered the largest inflows over the month, with $523 million and $394 million respectively. The Vanguard FTSE 250 UCITS ETF and Vanguard FTSE Developed Europe UCITS ETF were the largest detractors, suffering outflows of -$282 million and -$275 million respectively.
The Vanguard fixed income UCITS ETF range experienced outflows of around -$70 million in December, mainly due to outflows from the Vanguard USD Treasury Bond UCITS ETF (-$83 million) and the Vanguard USD Emerging Markets Government Bond UCITS ETF (-$75 million). Fixed income outflows were offset in part by positive flows into the Vanguard Global Aggregate Bond UCITS ETF ($35 million) and the Vanguard EUR Corporate Bond UCITS ETF ($29 million).
The Vanguard LifeStrategy UCITS ETF range continued to see significant investor interest, attracting $47 million of inflows.
1 Source: Vanguard, ETFbook, as at 31 December 2021. Data extracted on 5 January 2022.
Source: ETFWorld.co.uk
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