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ETF investors returned to stocks soon after rout, BlackRock says

[HONG KONG] Investors in exchange-traded funds (ETFs) remain bullish about equities despite the global selloff at the start of February, according to BlackRock Inc.

As of Feb 9, the world's largest asset manager had seen around US$6 billion of inflows worldwide into iShares' family of core ETFs since the start of the month, said Geir Espeskog, head of iShares APAC distribution at BlackRock. About US$4.8 billion went into US equities and US$1.2 billion into European stocks.

"We've definitely seen money come back into equities in the region after the volatility," Mr Espeskog said in an interview in Hong Kong. "Clients viewed it as an opportunity to buy equities and in APAC we had a similar picture, we had clients put in sizable amounts of money."

The strategy appears to have been well-timed. The MSCI All-Country World Index sank 5.8 per cent in the week ended Feb 9 but bounced back 4.3 per cent the following week.

BlackRock's flagship iShares Core S&P 500 ETF, with a market capitalisation of US$153 billion, saw inflows of about US$2.78 billion since the start of February, including US$634.5 million in the week ended Feb 9.

BlackRock has noticed growing use of their ETFs by insurers in Asia, with the group now accounting for about 20 per cent of the firm's US$100 billion of assets under management in the region, Mr Espeskog said.

As for fixed-income funds, the immediate picture for ETF demand remains murky as investors continue to digest the prospect of a more hawkish Federal Reserve.

"We need to see the dust settle a little bit more before we can draw any clear conclusions," Mr Espeskog said.