The promoters of exchange-traded funds (ETFs) enjoyed net inflows for May. These net inflows led to increased assets under management in the European ETF industry (€578.1 bn) for May, up from €570.6 bn at the end of April. The increase of €7.5 bn for May was driven mainly by net new sales (+€9.0 bn), while market performance contributed a negative €1.5 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 (€406.7 bn) held the majority of the assets, followed by bond funds (€142.3 bn), commodity products (€17.6 bn), “other” funds (€7.1 bn), money market funds (€3.7 bn), mixed-asset funds (€0.5 bn), and alternative UCITS products (€0.3 bn).
Fund Flows by Asset Type
Equity ETFs (+€6.2 bn) posted for May their eighth consecutive month of having the highest net inflows in the European ETF industry, followed by bond ETFs (+€3.0 bn), commodity ETFs (+€0.1 bn), mixed-asset ETFs (+€0.01 bn), and alternative UCITS ETFs (+€0.004 bn); money market ETFs (-€0.01 bn) and “other” ETFs (-€0.2 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 158 different peer groups. The highest assets under management at the end of May were held by funds classified as Equity US (€87.4 bn), followed by Equity Eurozone (€51.6 bn), Equity Global (€45.1 bn), and Equity Europe (€34.2 bn) as well as Bond EUR Corporates (€26.0 bn). These five peer groups accounted for 42.26% of the overall assets under management in the European ETF segment, while the ten top classifications by assets under management accounted for 58.08%. Overall, 21 of the 158 peer groups each accounted for more than 1% of the assets under management. In total, these 21 peer groups accounted for €423.2 bn or 73.19% 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 May, it was surprising that only five equity peer groups were among the ten best selling Lipper classifications. However, the best selling Lipper global classification for May was once again Equity Eurozone (+€1.7 bn), followed by Equity Global (+€1.3 bn) and Equity Emerging Markets Global (+€1.3 bn). The inflows of the ten best selling Lipper classifications equalled to 46.86% 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 May accounted for €3.4 bn of outflows. Bond USD Inflation Linked (-€0.8 bn) faced the highest net outflows, bettered somewhat by Equity Germany (-€0.6 bn) and Equity US Small & Mid Cap (-€0.4 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 49 ETF promoters in Europe held assets at or above €1.0 bn each. The largest ETF promoter in Europe—iShares (€273.1 bn)—accounted for 47.24% of the overall assets under management, far ahead of the number-two promoter—Lyxor ETF (€59.4 bn)—and the number-three promoter—Xtrackers (€58.9 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 92.88% 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 7.12% 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 May. Europe’s largest ETF promoter—iShares—was also the best selling ETF promoter in Europe for May (+€4.6 bn), followed by UBS ETF (+€1.1 bn) and Xtrackers (+€1.0 bn).
Since the flows of the ten top promoters accounted for 105.35% of the overall estimated net flows into ETFs in Europe for May, it was clear that some of the 49 promoters (15) faced net outflows (-€0.7 bn in total) over the course of May.
Assets Under Management by Funds
There were 2,183 instruments (primary funds and convenience share classes) listed as ETFs in the Lipper database at the end of May. 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 133 of the 2,183 instruments held assets above €1.0 bn each. These products accounted for €346.8 bn or 59.99% of the overall assets in the European ETF industry. The ten largest ETFs in Europe accounted for €95.7 bn or 16.56% 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 726 of the 2,183 instruments analyzed in this report showed net inflows of more than €10,000 each for May, accounting for €19.6 bn or 217.22% of the overall net flows. This meant in turn that the other 1,457 instruments faced no flows or net outflows for the month. In more detail only 44 of the 726 ETFs posting net inflows enjoyed inflows of more than €100 m each during May, summing to €9.7 bn. The best selling ETF for May, iShares Edge MSCI Europe Value Factor UCITS ETF EUR Acc, accounted for net inflows of €0.6 bn or 6.65% of the overall net inflows; it was followed closely by iShares Core MSCI World UCITS ETF USD (Acc) (+€0.6 bn) and iShares Core EURO STOXX 50 UCITS ETF EUR (Acc) (+€0.5 bn).
The flow pattern at the fund level showed the concentration even better than the statistics at the promoter or classification level. Seven of the ten best selling funds for May were promoted by iShares and accounted for total net inflows of €3.4 bn or 37.09% of the net inflows in the European ETF segment.
Detlef Glow is head of EMEA Research, Thomson Reuters Lipper