After below average net inflows for December, the net inflows in the European ETF industry for January (+€7.9 bn) were above the monthly rolling 12-month average (+€3.2 bn). The inflows into ETFs signaled investors' return to the markets, as stock markets globally recovered over the course of January. That said, it was surprising bond ETFs were the asset type with the highest net inflows (+€6.8 bn), followed by equity ETFs (+€1.4 bn), 'other' ETFs (+€0.04 bn), and alternative UCITS ETFs (+€0.03 bn). Conversely, commodity ETFs (-€0.2 bn) faced the highest outflows, bettered by money market ETFs (-€0.2 bn) and mixed-asset ETFs (-€0.004 bn).
With regard to the Lipper global classifications, the European ETF market was split into 159 different peer groups. The highest assets under management at the end of January were held by funds classified as Equity US (€121.4 bn), followed by Equity Global (€62.1 bn), Equity Eurozone (€48.3 bn), Equity Emerging Markets Global (€37.3 bn), and Equity Europe (€37.0 bn). These five peer groups accounted for 45.34% of the overall assets under management in the European ETF segment, while the ten top classifications by assets under management accounted for 58.82%. Overall, 19 of the 159 peer groups each accounted for more than 1% of the assets under management. In total, these 19 peer groups accounted for €484.6 bn, or 71.78%, of the overall assets under management. In addition, it was noteworthy that the rankings of the largest peer groups were quite stable, indicating European investors use the funds from these peer groups as core holdings and not just as so-called satellites that are bought and sold frequently to implement asset allocation views in investors' portfolios. These numbers showed that assets under management in the European ETF industry continued to be highly concentrated.
Source: Lipper at Refinitiv
With regard to the overall sales for January, it was not surprising bond funds (+€5.4 bn) dominated the table of the ten best-selling peer groups by net flows and with regard to the peer group count (seven). Despite the leading position of bonds, the best-selling Lipper global classification for January was Equity Emerging Markets Global (+€2.1 bn), followed by Bond Emerging Markets Global Hard Currencies (+€1.7 bn) and Bond USD (+€0.9 bn).
A closer look at the assets under management in the European ETF industry by promoters also showed high concentration, since only 19 of the 53 ETF promoters in Europe held assets at or above €1.0 bn each. The largest ETF promoter in Europe—iShares (€313.9 bn)—accounted for 46.50% of the overall assets under management, far ahead of the number-two promoter—Xtrackers (€72.8 bn)—and the number-three promoter—Lyxor ETF (€64.2 bn). (To learn more about the concentration of the European ETF market at the promoter level, please read our report: Spotlight on the concentration at the promoter level in the European ETF industry)
Since the European ETF market is highly concentrated, it was not surprising that six of the ten largest promoters by assets under management were among the ten top selling ETF promoters for January. iShares was the best-selling ETF promoter in Europe for January (+€5.1 bn), well ahead of Amundi ETF (+€1.4 bn) and Invesco (+€0.7 bn).
There were 2,728 instruments (primary funds and convenience share classes) listed as ETFs in the Lipper database at the end of January. With regard to the overall market pattern, it was not surprising the assets under management at the ETF level were also highly concentrated. Only 151 of the 2,728 instruments held assets above €1.0 bn each. These products accounted for €402.7 bn, or 59.65%, of the overall assets in the European ETF industry. The ten largest ETFs in Europe accounted for €111.2 bn, or 16.48%, 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.)
A total of 920 of the 2,728 instruments analyzed in this report showed net inflows of more than €10,000 each for January, accounting for €21.3 bn, or 269.52% of the overall net flows. This meant the other 1,808 instruments faced no flows or net outflows for the month. In more detail, only 45 of the 920 ETFs posting net inflows enjoyed inflows of more than €100 m each during January, summing to €10.6 bn. The best-selling ETF for January, PIMCO US Dollar Short Mat Src UCITS ETF USD Inc, accounted for net inflows of €0.6 bn, or 8.12%, of the overall net inflows. It was followed by iShares JP Morgan EM Local Gov Bond UCITS ETF (+€0.6 bn) and iShares J.P. Morgan $ EM Bond UCITS ETF USD (Dist) (+€0.6 bn).
Graph 9: Ten Best Selling ETFs, January 2019 (Euro Millions)
Source: Lipper at Refinitiv