Global ETF demand shrivels amid doused Fed rate-cut hopes

investmentnews.com:

Investor appetite for ETFs shrank dramatically in April, with global ETF flows falling to $68.5 billion from $126.5 billion in March, according to BlackRock data.

That came as diminished prospects of near-term US interest rate cuts spurred a broad risk aversion led to a significant drop in equity ETF flows and a shift toward government bonds, reported the Financial Times.

Across the world, equity ETF inflows saw a substantial decrease from $106.3 billion in March to $40.7 billion in April. Conversely, fixed-income ETFs, generally seen as lower-risk investments, recorded a modest uptick in demand, rising to $27.4 billion despite the near-halving of overall ETF flows.

Among fixed-income assets, government bond ETFs attracted $10.1 billion, the highest figure since October, reflecting investors’ flight to safety. Short-term US Treasury ETFs saw inflows for the first time since October, while intermediate Treasury funds captured most of the remaining demand.

“We have more inflows going into the front end, and also intermediate, than further out the [yield] curve,” Karim Chedid, head of investment strategy for iShares in the Emea region at BlackRock, told the Times.

Chedid characterized the April sentiment as “muted risk rather than risk off,” noting that markets stumbled amid further scaling back of expectations for Federal Reserve easing.

Scott Chronert, global head of ETF research at Citi, observed that fixed-income ETFs outpaced equity ETFs in the US, pulling in $15.2 billion versus $14.1 billion.

“US-listed ETF flows decelerated this month against a generally risk-off backdrop. Underlying trends also pointed to more cautious positioning,” Chronert told the Times. “Fixed income led all asset classes, but the gains were