Review of the European ETF market through April

Detlef Glow, head of EMEA Research at Thomson Reuters Lipper comments on the latest trends in the European ETF industry.

After a rough start for the year 2016 the assets under management in the European exchange-traded fund (ETF) industry recovered further during April – from €437.3bn for March to €445.4bn for April.

This increase of €8.1bn was mainly driven by the performance of the underlying markets (+€4.8bn), while net sales contributed a positive €3.3bn to the overall growth in assets under management in the ETF segment. With regard to the overall number of products, it was not surprising that equity funds (€301bn) held the majority of the assets, followed by bond funds (€119.4bn), commodity products (€14.4bn), “other” funds (€6.5bn), money market funds (€3.3bn), alternative UCITS products (€0.4bn), and mixed-asset funds (€0.4bn).

Graph 1: Market Share, Assets Under Management in the European ETF Segment by Asset Type, April 30, 2016

16-05-30 Graph 1 Mkt Share by AUM

Source: Thomson Reuters Lipper

Fund Flows by Asset Type

Taking the flows in the overall European fund industry during April into account, it was not surprising that bond funds (+€3.7bn) enjoyed the highest net inflows for the month, followed by commodity products (+€0.2bn) and “other” funds (+€0.1bn) as well as money market products (+€0.04bn) and mixed-asset funds (+€0.006bn). On the other side of the table equity ETFs faced the highest net outflows (-€0.8bn), bettered by alternative UCITS products (-€0.04bn).

The flows for April drove the overall net inflows in the European ETF segment to €9.5bn for the year so far.

Graph 2: Estimated Net Sales, April 2016 (€m)

16-05-30 Graph 2 ENS by Asset Type

Source: Thomson Reuters Lipper

Assets Under Management by Lipper Global Classifications

With regard to the Lipper global classifications, the European ETF market was split into 163 different peer groups. The highest assets under management were held by funds classified as Equity US (€62.7bn), followed by Equity EuroZone (€40.6bn), Equity Europe (€27.6bn), and Equity Global (€26.3bn) as well as Bond EUR Corporates (€23.8bn). These five peer groups accounted for 40.64% of the overall assets under management in the European ETF segment, while the ten top classifications by assets under management accounted for 57.25%. Overall, 20 of the 163 peer groups each accounted for more than 1% of the assets under management. In total, these 20 peer groups accounted for €321bn or 72.08% of the overall assets under management. These numbers showed that the assets under management in the European ETF industry continued to be highly concentrated.

Graph 3: Ten Top Lipper Global Classifications by Assets Under Management, April 30, 2016 (€m)

16-05-30 Graph 3 Top LGC by AUM

Source: Thomson Reuters Lipper

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.

Graph 4: Ten Smallest Lipper Global Classifications by Assets Under Management, April 30, 2016 (€m)

16-05-30 Graph 4 Smallest LGC by AUM

Source: Thomson Reuters Lipper

Fund Flows by Lipper Global Classifications

With regard to the overall sales for April, it was surprising that there were only two equity peer groups in the ten best selling Lipper classifications. Each of the three best selling classification groups accounted for estimated net sales of €1bn or more: Equity US (+€1.9bn), Bond EUR Corporates (+€1.4bn), and Equity Emerging Markets Global (+€1.3bn). 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 in the European ETF segment 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.

Graph 5: Ten Top Lipper Global Classifications by Estimated Net Sales, April 2016 (€m)

16-05-30 Graph 5 Top Selling LGCs Source: Thomson Reuters Lipper

On the other side of the table, the ten peer groups with the highest net outflows accounted for €5.9bn of outflows. Equity Eurozone (-€1.4bn) faced the highest outflows, bettered by Equity Japan (-€0.9bn) and Equity Europe (-€0.7bn). A view of the general flow trends in Europe during April showed that the flows within the ETF segment were more or less in line with the overall fund flows, since European investors favoured bond funds in April, while they sold equities and other risky products.

Graph 6: Ten Worst Selling Lipper Global Classifications by Estimated Net Sales, April 2016 (€m)

16-05-30 Graph 6 LGC Outflows Source: Thomson Reuters Lipper

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 19 of the 49 ETF promoters in Europe held assets at or above €1bn each. The largest ETF promoter in Europe—iShares (€215bn)—accounted for 48.28% of the overall assets under management, far ahead of the number-two promoter—db x-trackers (€53.3bn)—and the number-three promoter—Lyxor ETF (€45.7bn).

Graph 7: Ten Top ETF Promoters by Assets Under Management, April 30, 2016 (€m)

16-05-30 Graph 7 Top Promoter AUM

Source: Thomson Reuters Lipper

The ten top promoters accounted for 92.67% of the overall assets under management in the European ETF industry. This meant in turn that the other 39 fund promoters registering at least one ETF for sale in Europe accounted for only 7.33% of the overall assets under management.

Fund Flows by Promoters

Since the European ETF market is highly concentrated, it is somewhat surprising that only six of the ten largest promoters by assets under management were also among the ten top-selling ETF promoters for April. iShares, with net sales of €2.7bn, maintained its position as the best selling ETF promoter in Europe, once again followed by Amundi ETF (+€0.5bn) and UBS ETF (+€0.4bn).

Graph 8: Ten Best Selling ETF Promoters, April 2016 (€m)

 16-05-30 Graph 8 Top 10 Promoter ENS

Source: Thomson Reuters Lipper

Since the flows of the ten top promoters accounted for 133.3% of the overall estimated net flows into ETFs in Europe for April, it was clear that some of the 49 promoters (13) faced net outflows (-€1.2bn in total) over the course of April.

Assets Under Management by Funds

There were 2,160 instruments (primary funds and convenience share classes) listed as ETFs in the Lipper database at the end of April. 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 96 of the 2,160 instruments held assets above €1bn each. These products accounted for €246.4 bn or 55.3% of the overall assets in the European ETF industry. The ten largest ETFs in Europe accounted for €75.7bn or 17.0% of the overall assets under management.

Graph 9: Ten Largest ETFs by Assets Under Management, April 30, 2016 (€m)

16-05-30 Graph 9 Top 10 Funds by AUM Source: Thomson Reuters Lipper

ETF Flows by Funds

A total of 616 of the 2,160 instruments analyzed in this report showed net inflows of more than €10,000 each for April, accounting for €14.5 bn or roughly 4.4 times the overall net flows. This meant in turn that the other 1,544 instruments faced no flows or net outflows for the month. In more detail 34 of the 616 ETFs posting net inflows enjoyed inflows of more than €100 m each during April, summing to €7.7bn. The best selling ETF for April, iShares Core S&P 500 UCITS ETF, accounted for net inflows of €0.9bn or 25.9% of the overall inflows; it was followed by iShares $ Treasury Bond 1-3yr UCITS ETF (+€0.5bn) and iShares Euro High Yield Corporate Bond UCITS ETF (+€0.5bn).

Graph 10: Ten Best Selling ETFs, April 2016 (€m)

 16-05-30 Graph 10 Top Ten Funds by ENS

Source: Thomson Reuters Lipper

The flow pattern at the fund level showed the concentration even better than the statistics at the promoter or classification level. Overall, nine of the ten best selling funds for April were promoted by iShares and accounted for total net inflows of €3.8bn.

Tags:
preloader
Close Window
View the Magazine





You need to fill all required fields!