Investors Have Shied Away from Europe ETFs
Understanding Fund Flows in the US, European, and Chinese Markets
In a speech on October 1, 2015, Mario Draghi, President of the European Central Bank (or ECB), reaffirmed his confidence in the Eurozone’s progress and hinted at more stimulus in case the current deflationary scenario continues.
This brought some optimism among investors. More stimulus is expected to provide a boost to European markets as Eurozone companies stand to benefit from a weak euro.
Fund flows to Europe
In the last quarter, ETF investors have withdrawn $236 million from the SPDR EURO Stoxx 50 ETF (FEZ). Comparatively, investors have added $2.23 billion to the SPDR S&P 500 ETF (SPY).
So far in 2015, the ETF has witnessed inflows of $591 million compared to outflows of $405 million in 2014. The main reason for the outperformance of European stocks, despite global concerns and the Greek debt crisis, is the QE (quantitative easing) program.
The QE program, worth 1.1 trillion euro, is likely to last until September 2016 and is likely to support European equities.
Institutional investors increased exposure to FEZ in 2Q15
13F filings of institutional investors displayed increased interest in shares of the SPDR EURO Stoxx 50 ETF.
In 2Q15, trade activity by 13F filers displayed a 4.86% increase in aggregate shares held by institutional investors and hedge funds. Among the 166 13F filers holding the stock, 41 funds reduced their exposure to SPY, while 16 funds closed their positions. On the positive side, 30 funds took fresh positions and 61 funds increased their holdings of the fund.
Major institutional holders like UBS, Jane Street Group, Baird Financial, and SG Americas Securities added FEZ to their existing holdings. On the flip side, TD Asset Management, Jones Collombin, Goldman Sachs (GS), and Jefferies Group (JEF) reduced their holdings of FEZ. Among these, TD Asset Management and Jefferies sold all their shares of the fund.
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