Review of the European ETF market
The promoters of ETFs enjoyed net inflows for June. Despite these net inflows the assets under management in the European ETF industry (€577.8 bn) decreased for June, down from €577.9 bn at the end of May. The decrease of €0.1 bn for June was driven by market performance (-€7.8 bn), while net new sales contributed €7.7 bn to the assets under management in the ETF segment. With regard to the overall number of products, it was not surprising that equity funds (€403.9 bn) held the majority of the assets, followed by bond funds (€145.2 bn), commodity products (€17.1 bn), “other” funds (€7.3 bn), money market funds (€3.5 bn), mixed-asset funds (€0.6 bn), and alternative UCITS products (€0.3 bn).
Fund Flows by Asset Type
Bond ETFs (+€4.2 bn) posted the highest net inflows in the European ETF industry for June, followed by equity ETFs (+€3.5 bn), “other” ETFs (+€0.2 bn), and mixed-asset ETFs (+€0.01 bn) while alternative UCITS ETFs (-€0.003 bn), commodity ETFs (-€0.1 bn), and money market ETFs (-€0.1 bn) posted net outflows.
Assets Under Management by Lipper Global Classifications
With regard to the Lipper global classifications, the European ETF market was split into 156 different peer groups. The highest assets under management at the end of June were held by funds classified as Equity US (€87.1 bn), followed by Equity Eurozone (€50.2 bn), Equity Global (€44.8 bn), and Equity Europe (€33.8 bn) as well as Bond EUR Corporates (€27.0 bn). These five peer groups accounted for 42.02% of the overall assets under management in the European ETF segment, while the ten top classifications by assets under management accounted for 58.01%. Overall, 20 of the 156 peer groups each accounted for more than 1% of the assets under management. In total, these 20 peer groups accounted for €418.0 bn or 72.35% of the overall assets under management. These numbers showed that the assets under management in the European ETF industry continued to be highly concentrated.
The peer groups on the other side of the table showed that some funds in the European ETF market are quite low in assets and may face the risk of being closed in the near future. They are obviously lacking investor interest and might therefore not be profitable for the respective fund promoters (Please read our report: “Is there a consolidation ahead in the European ETF industry” for more details on this topic.)
Fund Flows by Lipper Global Classifications
With regard to the overall sales for June, it was somewhat surprising that only four bond peer groups were among the ten best selling Lipper classifications. The best selling Lipper global classification for June was Bond EUR Corporates (+€1.0 bn), followed closely by Equity Emerging Markets Global (+€1.0 bn) and Bond Emerging Markets Global in Local Currencies (+€0.8 bn). The inflows of the ten best selling Lipper classifications equalled to 74.17% of the overall net inflows. These numbers showed that the European ETF segment is also highly concentrated with regard to fund flows by sectors. Generally speaking, one would expect the flows into ETFs to be concentrated, since investors often use ETFs to implement their market views and short-term asset allocation decisions; these products are made for and therefore are easy to use for these purposes.
On the other side of the table the ten peer groups with the highest net outflows for June accounted for €1.8 bn of outflows. Equity Germany (-€0.6 bn) faced the highest net outflows, bettered somewhat by Equity Sector Financials (-€0.3 bn) and Bond EMU Government Short Term (-€0.2 bn).
Assets Under Management by Promoters
A closer look at the assets under management in the European ETF industry by promoters also showed high concentration, since only 20 of the 50 ETF promoters in Europe held assets at or above €1.0 bn each. The largest ETF promoter in Europe—iShares (€271.8 bn)—accounted for 47.04% of the overall assets under management, far ahead of the number-two promoter—Lyxor ETF (€59.5 bn)—and the number-three promoter—Xtrackers (€59.3 bn). (To learn more about the concentration of the European ETF market at the promoter level, please read our report: Facts about the concentration in the European ETF industry)
The ten top promoters accounted for 92.87% of the overall assets under management in the European ETF industry. This meant in turn that the other 40 fund promoters registering at least one ETF for sale in Europe accounted for only 7.13% of the overall assets under management.
Fund Flows by Promoters
Since the European ETF market is highly concentrated, it is not surprising that eight of the ten largest promoters by assets under management were also among the ten top-selling ETF promoters for June. Europe’s largest ETF promoter—iShares—was also the best selling ETF promoter in Europe for June (+€3.0 bn), far ahead of Amundi ETF (+€1.1 bn) and Lyxor ETF (+€1.0 bn).
Since the flows of the ten top promoters accounted for 107.02% of the overall estimated net flows into ETFs in Europe for June, it was clear that some of the 50 promoters (13) faced net outflows (-€0.9 bn in total) over the course of June.
Assets Under Management by Funds
There were 2,197 instruments (primary funds and convenience share classes) listed as ETFs in the Lipper database at the end of June. With regard to the overall market pattern it was not surprising that the assets under management at the ETF level were also highly concentrated. Only 129 of the 2,197 instruments held assets above €1.0 bn each. These products accounted for €339.7 bn or 58.79% of the overall assets in the European ETF industry. The ten largest ETFs in Europe accounted for €95.1 bn or 16.46% of the overall assets under management. (Please read our study: Is the European ETF industry dominated by only a few funds? to learn more about the concentration at the single-fund level in the European ETF industry.)
ETF Flows by Funds
A total of 745 of the 2,197 instruments analyzed in this report showed net inflows of more than €10,000 each for June, accounting for €16.3 bn or 210.85% of the overall net flows. This meant in turn that the other 1,452 instruments faced no flows or net outflows for the month. In more detail only 31 of the 745 ETFs posting net inflows enjoyed inflows of more than €100 m each during June, summing to €7.6 bn. The best selling ETF for June, iShares Core S&P 500 UCITS ETF USD (Acc), accounted for net inflows of €0.7 bn or 9.37% of the overall net inflows; it was followed by iShares Core Corp Bond UCITS ETF EUR (Dist) (+€0.5 bn) and Amundi Index MSCI Emerging Markets-UCTS ETF DR (C) (+€0.5 bn).
The flow pattern at the fund level showed the concentration even better than the statistics at the promoter or classification level. Six of the ten best selling funds for June were promoted by iShares and accounted for total net inflows of €2.7 bn or 34.56% of the net inflows in the European ETF segment.