European ETF trading commentary for the week ending 9 October 2009, provided by LaBranche Structured Products Europe (LSPE).

Demand from institutional investors for more conventional ETFs (rather than emerging or exotic trackers) was high last week and these conventional funds accounted for more than half of our creations and redemptions. We saw a creation/redemption ratio of 3:1 in favour of creations while net inflows (creations minus redemptions) exceeded €125 million.

There were unusually large block trades in liquid ETFs tracking indices such as the DJ Euro Stoxx 50, CAC, DAX and FTSE 100. Investors also switched to property and small cap ETFs, such as the iShares FTSE EPRA/NAREIT Developed Markets Property Yield Fund (LSE: IDWP) and iShares DJ Euro Stoxx SmallCap ETF (LSE: DJSC).

Last week, we sold the iShares FTSE BRIC 50 ETF (LSE: BRIC), Lyxor ETF EasternEurope CECE (Euronext Paris: CEC) and funds tracking India to investors; investment banking strategists currently favour those markets over developed ones. In bonds we sold large amounts of the iShares Euro Corporate Bond ETF (LSE: IBCX), iShares GBP Index linked Gilt ETF (LSE: INXG), iShares Barclays Euro Corporate Bond ETF (LSE: IEAC) and iShares US Treasury Bond 7-10 ETF (LSE: IBTM).

In terms of sectors, there was demand for the Lyxor ETF DJ Stoxx 600 Banks (NYSE Euronext: BNK) and Lyxor ETF DJ Stoxx 600 Insurance (NYSE Euronext: INS).

Investors were largely sellers of the Lyxor ETF China Enterprise HSC (NYSE Euronext: ASI) and iShares NASDAQ-100R DE (Borse Dusseldorf: NDXEX).

In the US, the iShares MSCI Emerging Markets Index ETF (NYSE: EEM) is still in strong demand and generated inflows of more than US$280 million last week, while the iShares iBoxx $ Investment Grade Corporate Bond Fund (NYSE: LQD) had net outflows of more than US$500 million. Finally, please bear in mind that options and futures expire in the UK on Friday 16.

This report is not an offer to sell or a solicitation of any investment products or other financial product or service, an official confirmation of any transaction, or an official statement of LSPE.