Assets under management in the European exchange-traded fund (ETF) industry recovered further during April—from €437.3 bn for March to €445.4 bn for April. This…
increase of €8.1 bn was mainly driven by the performance of the underlying markets (+€4.8 bn), while net sales contributed a positive €3.3 bn to the overall growth in assets under management in the ETF segment.
– Bond funds (+€3.7 bn) enjoyed the highest net inflows for April.
– Equity US (+€1.9 bn), Bond EUR Corporates (+€1.4 bn), and Equity Emerging Markets Global (+€1.3 bn) were the best selling Lipper global classifications for April.
– iShares (+€2.7 bn), Amundi ETF (+€0.5 bn), and UBS ETF (+€0.4 bn) were the best selling ETF promoters in Europe for April.
– The ten best selling funds gathered total net inflows of €4.1 bn for April.
– iShares Core S&P 500 UCITS ETF, accounting for net inflows of €0.9 bn or 25.9% of the total net inflows, was the best selling individual ETF for April.
REVIEW OF THE EUROPEAN ETF MARKET, APRIL 2016
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 €437.3 bn for March to €445.4 bn for April. This increase of €8.1 bn was mainly driven by the performance of the underlying markets (+€4.8 bn), while net sales contributed a positive €3.3 bn 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 (€301.0 bn) held the majority of the assets, followed by bond funds (€119.4 bn), commodity products (€14.4 bn), “other” funds (€6.5 bn), money market funds (€3.3 bn), alternative UCITS products (€0.4 bn), and mixed-asset funds (€0.4 bn).
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 (+€3.7 bn) enjoyed the highest net inflows for the month, followed by commodity products (+€0.2 bn) and “other” funds (+€0.1 bn) as well as money market products (+€0.04 bn) and mixed-asset funds (+€0.006 bn). On the other side of the table equity ETFs faced the highest net outflows (-€0.8 bn), bettered by alternative UCITS products (-€0.04 bn).
The flows for April drove the overall net inflows in the European ETF segment to €9.5 bn for the year so far.
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 (€62.7 bn), followed by Equity EuroZone (€40.6 bn), Equity Europe (€27.6 bn), and Equity Global (€26.3 bn) as well as Bond EUR Corporates (€23.8 bn). 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 €321.0 bn 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.
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.
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 €1.0 bn or more: Equity US (+€1.9 bn), Bond EUR Corporates (+€1.4 bn), and Equity Emerging Markets Global (+€1.3 bn). 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.
On the other side of the table, the ten peer groups with the highest net outflows accounted for €5.9 bn of outflows. Equity Eurozone (-€1.4 bn) faced the highest outflows, bettered by Equity Japan (-€0.9 bn) and Equity Europe (-€0.7 bn). 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.
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 €1.0 bn each. The largest ETF promoter in Europe—iShares (€215.0 bn)—accounted for 48.28% of the overall assets under management, far ahead of the number-two promoter—db x-trackers (€53.3 bn)—and the number-three promoter—Lyxor ETF (€45.7 bn).
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 €2.7 bn, maintained its position as the best selling ETF promoter in Europe, once again followed by Amundi ETF (+€0.5 bn) and UBS ETF (+€0.4 bn).
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 (-€1.2 bn 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 €1.0 bn 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 €75.7 bn or 17.0% of the overall assets under management.
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 €7.7 bn. The best selling ETF for April, iShares Core S&P 500 UCITS ETF, accounted for net inflows of €0.9 bn or 25.9% of the overall inflows; it was followed by iShares $ Treasury Bond 1-3yr UCITS ETF (+€0.5 bn) and iShares Euro High Yield Corporate Bond UCITS ETF (+€0.5 bn).
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 €3.8 bn.