European ETF issuers expect a surge in demand for thematic funds focusing on water, biotechnology, and technology, research shows.
Cerulli Associates surveyed 37 issuers and found high demand is expected over the next two years for ETFs tracking these themes over the next two years.
Among the European ETF issuers with a combined total of €740 billion in assets under management, over 90% of the firms expect a surge in demand for water-themed ETFs in particular.
According to Cerulli, combined active and passive assets in the water-themed sector achieved a compound annual growth rate of 24% over the last five years.
Net flows into sector-themed equity products during the first ten months of 2020 amounted to €89 billion, more than triple the net sales for 2019. This growth trend is set to continue over the next couple of years.
Over 80% of the ETF issuers that took part in the research said demand will grow over the next 12 to 24 months.
“The consensus of managers operating in Europe is that broad themes relating to technology and sustainability will prevail in the aftermath of Covid-19 and longer term,” said Fabrizio Zumbo, associate director, European asset and wealth management research at Cerulli.
“Technology themes, which include artificial intelligence, cybersecurity, and 5G networks, are expected to continue to attract high demand, in part due to the success of mass remote working, which is likely to continue to an extent post-pandemic,” he added..
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