Review European ETF market in 2015
Over the course of the year 2015 the assets under management in the European ETF industry increased from €368.9 bn to €449.3 bn. This increase of €80.4 bn was driven mainly by net sales, which contributed €71.2 bn to the overall growth in the assets under management in the ETF segment.
With regard to the overall number of products, it was not surprising that equity funds (€319.9 bn) held the majority of the assets, followed by bond funds (€106.8 bn), commodity products (€12.0 bn), “other” funds (€6.1 bn), money market products(€3.6 bn), alternative Ucits products (€0.5 bn), and mixed-asset products (€0.4 bn).
Graph 1: Market Share Assets Under Management in the European ETF Segment by Asset Type, December 31, 2015
Source: Thomson Reuters Lipper Fund Data
Fund Flows by Asset Type
The year 2015 was another successful year for the European ETF industry with regard to fund flows. Equity funds (+€44.6 bn) enjoyed the highest net inflows for the year, followed by bond funds (+€23.9 bn), “other” products (+€1.6 bn), money market funds (+€1.1 bn), and mixed-asset products (+€0.1 bn). In contrast, commodity funds (-€0.1 bn) suffered the highest net outflows, bettered somewhat by alternative UCITS funds (-€0.01 bn).
These flows amounted to overall net flows in the European ETF segment of a healthy €71.2 bn for the year 2015.
Graph 2: Estimated Net Sales, 2015 by Asset Type (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
Assets Under Management by Lipper Global Classifications
With regard to the Lipper global classifications the European ETF market was split into 162 different peer groups. The highest assets under management were held by funds classified as Equity US (€63.7 bn), followed by Equity EuroZone (€47.1 bn), Equity Europe (€29.5 bn), and Equity Global (€25.9 bn) as well as Bond EUR Corporates (€21.0 bn). These five peer groups accounted for 41.67% of the overall assets under management in the European ETF segment, while the ten top classifications by assets under management accounted for 59.09%. Overall, 19 of the 162 peer groups each accounted for more than 1% of the assets under management, in total accounting for €323.3 bn or 71.95% of the overall assets under management. These numbers showed that the assets under management in the European ETF industry seem to be highly concentrated.
Graph 3: Ten Top Lipper Global Classifications by Assets Under Management, December 31, 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
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, December 31, 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
Fund Flows by Lipper Global Classifications
With regard to the overall sales for the year 2015, it was not surprising that the peer groups in the ten best selling Lipper classifications were spread over two major asset classes–bonds and equities. That said, the first three—Equity Eurozone (+€16.1 bn), Equity Europe (+€9.1 bn), and Equity Germany (+€3.5 bn)—accounted for 40.36% of the overall sales during the year. 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, 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
On the other side of the table the ten peer groups with the highest net outflows accounted for €5.8 bn of the net outflows. With regard to the general market conditions, especially over the last quarter of 2015, it was not surprising to see categories such as Equity China (-€2.0 bn), Bond USD Short Term (-€0.9 bn), and Commodities Precious Metals (-€0.9 bn) facing the highest net outflows.
Graph 6: Ten Worst Selling Lipper Global Classifications by Estimated Net Sales, 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
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 above €1.0 bn. The largest ETF promoter in Europe—iShares (€214.1 bn)—accounted for 47.66% of the overall assets under management, far ahead of the number-two promoter—db x-trackers (€56.4 bn)—and the number-three promoter—Lyxor (€47.9 bn).
Graph 7: Ten Top ETF Promoters by Assets Under Management, December 31, 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
The ten top promoters accounted for 92.95% 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 7.05% of the overall assets under management.
Fund Flows by Promoters
Since the European ETF market is highly concentrated, it is no surprise that nine of the ten largest promoters by assets under management were also among the ten top-selling ETF promoters for the year 2015. iShares, with net sales of €30.3 bn, maintained its position as the best selling ETF promoter in Europe, followed by db x-trackers (+€10.0 bn) and Lyxor ETF (+€8.8 bn).
Graph 8: Ten Best Selling ETF Promoters, 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
Since the flows of the ten top promoters accounted for 98.28% of the overall estimated net flows into ETFs in Europe for 2015, it is clear that some of the 49 promoters (13) faced net outflows (-€1.3 bn in total) over the course of 2015.
Assets Under Management by Funds
There were 2,102 instruments (primary funds and convenience share classes) listed as ETFs in the Lipper database at the end of 2015. 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 103 of the 2,102 instruments held assets above €1.0 bn. These products accounted for €285.2 bn or 57.50% of the overall assets in the European ETF industry. The ten largest ETFs in Europe accounted for €81.8 bn or 18.22% of the overall assets under management.
Graph 9: Ten Largest ETFs by Assets Under Management, December 31, 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
ETF Flows by Funds
A total of 1,093 of the 2,102 instruments analyzed in this report showed net inflows for the year 2015, accounting for €105.1 bn or roughly 1.5 times the overall net flows. This meant in turn that the other 1,009 instruments faced no flows or net outflows for the year. In more detail 16 of the 1,093 ETFs posting net inflows enjoyed inflows of more than €1 bn each during the year 2015, summing to €29.6 bn. The best selling ETF for the year 2015, iShares Core MSCI World UCITS ETF, accounted for net inflows of €2.6 bn or 3.64% of the overall net inflows, followed by iShares EURO STOXX 50 UCITS ETF (+€2.6 bn) and iShares Core S&P 500 UCITS ETF (+€2.3 bn).
Graph 10: Ten Best Selling ETFs in 2015 (Euro Millions)
Source: Thomson Reuters Lipper Fund Data
The flow pattern at the fund level showed the concentration even better than the statistics on the promoter or classification level. Overall, seven of the ten best selling funds for the year 2015 were promoted by iShares and accounted for net inflows of €16.0 bn.
Detlef Glow, head of Lipper EMEA Research
