ETF Recap: Global ETF Market Experiences Sudden Flash Crash

BlackRock’s world ETF listed on the Deutsche Boerse experienced a sudden 5% drop in price shortly after US jobs data was released earlier this month. The $74.4bn iShares Core MSCI World UCITS ETF (EUNL) briefly encountered a flash crash at 2.30pm CET on 5 April but quickly recovered as normal trading resumed. Despite the incident, other listings of the ETF across different exchanges remained stable. Following the crash, Deutsche Boerse conducted an investigation that did not reveal any signs of suspicious trading, market manipulation, or rule violations. Multiple stop orders were also triggered which exacerbated the decline. As a safeguard, trading was halted after a 5% volume limit was reached based on the previous night’s closing value.

ARK Invest, founded by Cathie Wood, recently entered the European ETF market by launching three actively managed ETFs focused on innovation, genomics, and artificial intelligence. The anticipation of the launches sparked questions from fund selectors about whether Wood’s success in the US market would be replicated in Europe. Despite concerns about its volatile track record and reputation as a ‘FOMO-stock’ with retail investors, ARK Invest is engaging professional investors through a European roadshow after acquiring Rize ETF from AssetCo last September. Wood stated that the launches are not just a response to increased interest from European investors but a declaration of their long-term commitment to Europe.

In the first quarter of this year, European ESG ETF inflows experienced a significant 94% drop to €7.1bn from €13.8bn in the previous quarter, representing only 16% of the total €44.5bn inflows. This shift indicates a broader investor pivot towards US and global developed market exposures. Despite the overall growth in European ETFs, with assets reaching a record $1.92trn, ESG funds are facing a relative decline as investors become increasingly disillusioned with their prolonged underperformance. This trend suggests a potential crisis for ESG investing amidst the general growth of ETFs in Europe.

ETF Wrap is a weekly digest of the top stories on ETF Stream.