Lyxor ETF Money Monitor: For the very first time, European ETFs gathered a record EUR 100.8 Bn, bringing total assets to EUR 870 Bn (+40% vs. 2018)…..
Vincent Denoiseux, Head of ETF Research and Solutions at Lyxor Asset Management
European ETF market reaches record high in 2019 as inflows top EUR 100 Bn
- European ETFs gathered EUR 100.8 Bn
- European ETFs account for more than 7% of European funds’ assets
- 2019 was the year of Fixed Income, while Equities faced a volatile year
- Another record year for ESG
Lyxor ETF Research releases its “Money Monitor 2019” report, an in-depth review of last year’s flows into ETFs domiciled in Europe, which has for the first time been expanded to also monitor flows into active funds.
This newly enriched publication is based on the analysis of flows into 47,000 funds and ETFs and provides a comprehensive view on the main trends and drivers of the European asset management industry1.
For the very first time, European ETFs gathered a record EUR 100.8 Bn, bringing total assets to EUR 870 Bn (+40% vs. 2018).
This has been as a result of accelerated growth in Europe over the past five years compared with growth in the more mature US market (+20% vs. 19% in the US).
ETFs now represent 7% of total European funds’ assets (vs. 6% in 2018), with Equity ETFs accounting for 69% of the market, Fixed Income for 27% and Commodities for 3%, the remaining being in the other asset classes.
The year of Fixed Income
2019 was undoubtedly the year of Fixed Income, as inflows reached EUR 54 Bn, bringing total assets to EUR 234 Bn vs. EUR 152 Bn in 2018.
European investors turned to higher yielding opportunities (Corporate Bonds, US Government Bonds, Emerging Markets Bonds, High Yield) and geographical diversification was key, mostly outside Europe.
Whilst it’s taken several years for the Fixed Income ETF segment to take off, the trend observed over the past 5 years looks solid and resilient with an average EUR 26 Bn of annual inflows.
A mixed 2019 for Equities
With regards to Equities, 2019 was a year of contrasts. European equity markets bore the brunt of rising macro-economic uncertainties.
There was the threat of ‘no deal’ Brexit in the first half, but the second half saw a sharp rebound on the back of easing trade tensions.
ETFs benefitted from the rebound, gathering EUR 46 Bn while active equity funds saw outflows of EUR 43 Bn.
UK equities represented an interesting example of open-ended funds-to-ETF rotation. In the context of Brexit, we observed very strong flows into UK equity ETFs throughout the end of 2019, totaling EUR 7.1 Bn across the last 4 months. These flows have not been observed on active funds.
A record year for ESG and Smart Beta ETFs
Regulatory changes and a growing need for sustainable investment vehicles across the whole investor spectrum fueled a boom in the ESG segment, which collected a record EUR 16.5 Bn of net new assets last year, bringing total assets under management to EUR 30.5 Bn.
Smart Beta ETFs also witnessed record growth with EUR 9.4 Bn cumulated inflows last year. Flows went mainly into Income Generation, Value and Minimum Volatility/Minimum Variance strategies.
Vincent Denoiseux, Head of ETF Research and Solutions at Lyxor Asset Management commented: “ETF market share has consistently risen over the past two decades, underlining the increasing adoption among European investors. With this enriched publication including flows into active funds, our aim at Lyxor is to help investors get an even more detailed picture of trends at play in the industry and of flow allocation between active and passive management.”
1 Sources of all data: Morningstar, Bloomberg, Lyxor International Asset Management, asset under management as at 31/12/2019 on the basis of data available as of 20/01/2020.