European ETFs have come of age, says Lipper Feri

While money was haemorrhaging from European investment funds last year and early this year, one segment of the market somehow managed to remain buoyant – exchange-traded funds or ETFs. These low-cost tracker funds, first introduced in Europe in 1999 six years after the appeared in the US, may not be the most exciting (or lucrative) of investment products, but they have managed to keep (and indeed multiply) their investors when all others have been losing theirs – a feat not to be sniffed at in the current climate. In fact, according to Lipper Feri, European ETFs saw sales of €21.8bn in the first half of 2008,  a level nearly four times higher than the previous year. This contrasted with outflows from European investment funds of €41bn. There are now 476 ETFs in Europe with assets under management of €30.8bn.

“Market volatility and liquidity issues appear to be the main drivers behind their rapid expansion,” says Lipper Feri. “So far they have been mainly the preserve of institutional investors. But discretionary managers and private investors are becoming increasingly attracted by their flexibility, low cost and transparency.”

ETFs are particularly popular in the cross-border space in Europe, with 76% of assets attributable to funds in Lipper Feri’s ‘international’ category. The best-selling asset class over the past year was equities with net sales of €19.8bn, highlighting the ability of these tracker products to survive where others stumble.

However, anyone considering entering the ETF space should consider carefully. Although there are now 27 providers of ETFs in Europe compared with just 16 in 2006, the market remains highly concentrated. The three major players in Europe account for 86% of assets under management in ETFs – Barclays (38.6%), Lyxor (Société Générale) (25%) and Deutsche/DWS (15.7%).

And despite the many new players that have entered the market over the past two years, this dominance shows little sign of being challenged. If anything, it is intensifying.

“In terms of new business, these three groups accounted for 90% of ETF net sales over the past year with Deutsche Bank posting the strongest net flows of €14.3bn,” says Lipper Feri. Fiona Rintoul, Editorial Director
© 2008 funds europe

Executive Interviews

INTERVIEW: Put your money where your mouth is

Jun 10, 2016

At Kempen Capital Management, they believe portfolio managers should invest in their own funds. David Stevenson talks to Lars Dijkstra, CIO of the €42 billion manager.

EXECUTIVE INTERVIEW: ‘Volatility is the name of the game’

May 13, 2016

Axa Investment Managers chief executive officer, Andrea Rossi, talks to David Stevenson about bringing all his firm’s subsidiaries under one name and the opportunities that a difficult market...


ROUNDTABLE: Beyond the hype

Oct 13, 2016

The use of smart beta investing continues to grow. Our panel, made up of both providers and users, discusses what the strategy actually means, how it should be used and the kind of pitfalls that may arise when using this innovative investment technique.

MIFID II ROUNDTABLE: Following the direction of travel

Sep 07, 2016

Fund management firms Aberdeen and HSBC Global meet with specialist providers to speak about how the industry is evolving towards MiFID II.