Investors put more money into pan-European equity exchange-traded funds this month due to the political uncertainty in the US according to BlackRock.

Global inflows into exchange-traded funds collapsed to $1.8bn in the first two weeks of this month from $35bn in September, according to BlackRock.

Dodd Kittsley, head of global ETP market trends research for BlackRock said in a blog: “Washington’s woes have again caught up with the market. But if the past year of policy-driven markets has taught us anything, it’s that what we’re seeing now may just be the new normal.”

He said that in the two weeks to October 14, there were inflows of $6.6bn into developed equity ETF products while the largest outflows were $3.7bn from fixed income. In contrast in October last year bond inflows were $56.1bn and equity mutual fund outflows were $17bn.

“We have seen increased demand for developed market equities outside the US, with a recent strong preference for pan-European equity exposure,” said Kittsley.

Larry Fink, chairman and chief executive of BlackRock, said on BlackRock’s third quarter results call that iShares, the ETF business, had more than $5bn of flows in Europe after the completion of acquisition of the Credit Suisse ETF platform in July.

Investors have also been attracted to short maturity credit and floating rate notes in expectation of rising rates.

Fink said: “In the [third] quarter, we saw our first bank client purchase of iSharesBonds and we launched near a short-duration bond fund that is well positioned for the current fixed income environment.”

In US equity ETFs, investors have been moving from defensive into select cyclical sectors, such as energy and information technology according to BlackRock.