September marked a historic month for the UCITS ETF market, setting new records, writes Neil Davies, Head of ETF Product and Capital Markets, Europe and APAC at Fidelity International.
“Never before has so much capital flowed into ETFs, with investors allocating unprecedented volumes to equity ETFs. The strongest inflows were seen in products focused on the US, emerging markets, and commodities — particularly gold ETFs.
“After a relatively quiet summer, ETF markets have made a spectacular return. Falling US interest rates have clearly reignited risk appetite, prompting investors to rotate from bond ETFs into equities.
“This trend once again underscores the enduring appeal of ETFs as an investment vehicle. The continued democratisation of capital markets remains a powerful driver, and when supported by positive macroeconomic momentum, we can expect to see record-breaking inflows like those witnessed in September,” Davies adds.
Market event of the month for Fidelity was that Semi-Transparent ETFs became available in Europe for the first time.
“Recently, the Irish Central Bank allowed ETF providers to offer investors semi-transparent ETFs for the first time. This structure allows fundamental research to be integrated into ETFs while protecting their intellectual property, as they do not have to disclose the holdings of the respective products daily.
“What may seem counterintuitive at first can have many advantages for investors. Especially in less efficient areas of the market, active research can really pay off. In order to offer this to customers, product providers must be able to handle the disclosure of their research more flexibly. The fact that this is now possible thanks to the regulator is good news for investors,” says Davies.
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