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ETF industry facing highest level of closures since inception

european_etf_closuresClosures of European ETF funds are at their highest level since 2000 when the industry began.

Refinitiv said 31 funds were on “The ETF Death List” at the end of October, with many more risking closure.

The firm said it was surprised given the rise in ETF assets under management (AUM) which occured even through 2020 - but also said closures could reflect high launch activity.

Overall, 358 out of the 1,689 funds examined were not able to gather more than €100 million in AUM over the course of the last three years.

Eighty-eight of these did not hold more than €10 million in AUM “which exposes these funds to a high risk for closure”.

Detlef Glow, regional head of research at Refinitiv, nevertheless said that overall AUM and fund flow patterns look healthy for the year. 

“It is not to be expected that the industry is in a consolidation mode. Therefore, it is a surprise that 2020 may mark the year with the highest number of ETF closures since the inception of the European ETF industry in 2000.

“From my point of view, the high number of ETF closures in Europe goes in line with high launching activity. Since not all of the new products end up meeting investor expectations, they are closed after a period of time.”

AUM in the European ETF industry was €874.3 billion at the end of October.

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