November was a huge month for exchange-traded funds (ETFs) as assets flowed in at record levels. According to data from BlackRock, global ETFs drew in US$40.1 billion, bringing assets gathered year to date up to $267.9 billion. After a shaky October, then, investors are returning to the fold, boosting their allocations to equities and giving ETFs a big lift in the process.
But amid all the good news, investors gave up on China as China-listed funds experienced a third month of outflows. Investors’ dissatisfaction with China’s performance stems from a barrage of weak data over the last few weeks. Investors pared their exposure to China equity funds by $2.6 billion, despite the fact that a surprise rate cut sent the Shanghai Composite Index up 10.3%.
According to Bloomberg, it means investors aren’t confident that China’s stock market rally will last. That skepticism in reflected in the numbers. The CSOP FTSE China A50 ETF lost US$845 million in the two weeks through Nov. 28 (the biggest outflow since the fund’s inception in 2012), reports Bloomberg. The iShares FTSE A50 China Index ETF also lost $585 million the week of Nov. 24, the most since 2009 even as the Shanghai Composite hit a three-year high.
This stands in stark contrast to inflows in the rest of the world, where investors are betting on better economic news to come. Specifically, according to BlackRock, U.S. equities added $36.1 billion for large cap funds, Japanese equity ETFs listed in the U.S. and Europe brought in $4.1 billion, and European fixed income flows hit $2 billion mainly in investment-grade corporate debt.