The promoters of ETFs in Europe enjoyed net inflows for April. These inflows led, in combination with a positive performance of the underlying markets, to increased assets under management in the European ETF industry. In more detail, the assets under management in the European ETF industry increased from €725.2 bn as of March 31, 2019, to €746.7 bn at the end of April. The increase of €21.5 bn for April was driven by the performance of the underlying markets (+€17.8 bn), while net sales contributed inflows of €3.7 bn to assets under management in the European ETF segment.
With regard to the overall number of products, it was not surprising equity funds (€521.2 bn) held the majority of the assets, followed by bond funds (€195.4 bn), commodity products (€18.6 bn), “other” funds (€5.5 bn), money market funds (€3.7 bn), mixed-asset funds (€1.7 bn), and alternative UCITS products (€0.6 bn).
Graph 1: Market Share, Assets Under Management in the European ETF Segment by Asset Type, April 30, 2019
Source: Lipper from Refinitiv
Fund Flows by Asset Type
The level of estimated net inflows into ETFs felt below average for April. In more detail, the net inflows in the European ETF industry for April (+€3.7 bn) were below the monthly rolling 12-month average (+€4.3 bn). The inflows into ETFs were a sign that investors had returned to the markets, as stock markets globally recovered further over the course of April. That said, it was surprising bond ETFs were again the asset type with the highest net inflows (+€4.4 bn), followed by mixed-asset ETFs (+€0.1 bn), “other” ETFs (+€0.1 bn), commodity ETFs (+€0.02 bn), and money market ETFs (+€0.01 bn). With regard to the market conditions, it was also surprising that equity ETFs (-€0.8 bn) faced the highest outflows in the European ETF segment, bettered by alternative UCITS ETFs (-€0.1 bn).
This flow pattern drove the overall net flows to +€30.9 bn for 2019.
Graph 2: Estimated Net Sales, April 2019 (Euro Millions)
Source: Lipper from Refinitiv
Assets Under Management by Lipper Global Classifications
With regard to the Lipper global classifications, the European ETF market was split into 161 different peer groups. The highest assets under management at the end of April were held by funds classified as Equity US (€137.6 bn), followed by Equity Global (€76.9 bn), Equity Eurozone (€50.3 bn), Equity Emerging Markets Global (€42.3 bn), and Equity Europe (€39.4 bn). These five peer groups accounted for 46.41% of the overall assets under management in the European ETF segment, while the 10-top classifications by assets under management accounted for 59.65%. Overall, 18 of the 161 peer groups each accounted for more than 1% of assets under management. In total, these 18 peer groups accounted for €534.1 bn, or 71.53%, 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 investor portfolios. These numbers showed assets under management in the European ETF industry continued to be highly concentrated.
Graph 3: Ten-Top Lipper Global Classifications by Assets Under Management, April 30, 2019 (Euro Millions)
Source: Lipper from Refinitiv
The peer groups on the other side of the table showed some funds in the European ETF market are quite low in assets and risk being closed in the near future. They are obviously lacking investor interest and might, therefore, not be profitable for their respective fund promoters (Please read our report: “Is there a consolidation ahead in the European ETF industry?” for more details on this topic).
Graph 4: Ten Smallest Lipper Global Classifications by Assets Under Management, April 30, 2019 (Euro Millions)
Source: Lipper from Refinitiv
Fund Flows by Lipper Global Classifications
With regard to the overall sales for April, it was not surprising bond funds (+€3.4 bn) dominated the table of the 10 best-selling peer groups by net flows, as well as by the peer group count. Conversely, the best-selling Lipper global classification for April was Equity Emerging Markets Global (+€1.0 bn), followed by Bond EUR High Yield (+€0.9 bn) and Bond Emerging Markets in Local Currencies (+€0.9 bn).
The net inflows of the 10 best-selling Lipper classifications equalled 166.68% of the overall net inflows. These numbers showed the European ETF segment is also highly concentrated with regard to fund flows by sector. 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 and, therefore, are easy to use, for these purposes.
Graph 5: Ten Best- and Worst-Selling Lipper Global Classifications by Estimated Net Sales, April 2019 (Euro Millions)
Source: Lipper from Refinitiv
On the other side of the table, the 10 peer groups with the highest net outflows for April accounted for €4.2 bn of outflows. Equity Eurozone (-€1.9 bn) faced the highest net outflows, bettered somewhat by Equity US (-€0.6 bn) and Equity Germany (-€0.4 bn).
Assets Under Management by Promoters
A closer look at assets under management in the European ETF industry by promoters also showed high concentration, since only 21 of the 51 ETF promoters in Europe held assets at or above €1.0 bn each. The largest ETF promoter in Europe—iShares (€346.6 bn)—accounted for 46.41% of the overall assets under management, far ahead of the number-two promoter—Xtrackers (€81.3 bn)—and the number-three promoter—Lyxor ETF (€63.6 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).
Graph 6: Ten-Top ETF Promoters by Assets Under Management, April 30, 2019 (Euro Millions)
Source: Lipper from Refinitiv
The 10-top promoters accounted for 93.24% of the overall assets under management in the European ETF industry. This meant, in turn, the other 41 fund promoters registering at least one ETF for sale in Europe accounted for only 6.76% of the overall assets under management.
Fund Flows by Promoters
Since the European ETF market is highly concentrated, it was surprising that only five of the 10 largest promoters by assets under management were among the 10-top selling ETF promoters for April. iShares was the best-selling ETF promoter in Europe for April (+€3.6 bn), well ahead of Amundi ETF (+€1.6 bn) and Xtrackers (+€1.0 bn).
Graph 7: Ten Best-Selling ETF Promoters, April 2019 (Euro Millions)
Source: Lipper from Refinitiv
Since the flows of the 10-top promoters accounted for 141.47% of the overall estimated net flows into ETFs in Europe for April, it was clear that some of the 51 promoters (22) faced net outflows (-€4.3 bn in total) over the course of the month.
Assets Under Management by Funds
There were 2,824 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 the assets under management at the ETF level were also highly concentrated. Only 162 of the 2,824 instruments held assets above €1.0 bn each. These products accounted for €454.4 bn, or 60.85%, of the overall assets in the European ETF industry. The 10 largest ETFs in Europe accounted for €125.4 bn, or 16.79%, 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).
Graph 8: Ten Largest ETFs by Assets Under Management, April 30, 2019 (Euro Millions)
Source: Lipper from Refinitiv
ETF Flows by Funds
A total of 850 of the 2,824 instruments analyzed in this report showed net inflows of more than €10,000 each for April, accounting for €20.0 bn, or 539.63%, of the overall net flows. This meant the other 1,974 instruments faced no flows or net outflows for the month (By looking at this statistic, one needs to bear in mind that some of these instruments are convenience share classes that do not report assets under management. This means Lipper can’t calculate fund flows for these ETFs). In more detail, only 41 of the 850 ETFs posting net inflows enjoyed inflows of more than €100 m each during April, for a total of €10.2 bn. The best-selling ETF for April, iShares High Yield Corp Bond UCITS ETF EUR (Dist), accounted for net inflows of €0.7 bn, or 19.98%, of the overall net inflows. It was followed by iShares JP Morgan EM Local Gov Bond UCITS ETF (+€0.7 bn) and Amundi S&P 500 UCITS ETF- USD (C) (+€0.5 bn).
Graph 9: Ten Best-Selling ETFs, April 2019 (Euro Millions)
Source: Lipper from Refinitiv
The flow pattern at the fund level indicated there was a lot of turnover and rotation during April, but it also showed the concentration of the European ETF industry even better than the statistics at the promoter or classification level. Given its size, it was not surprising that five of the 10 best-selling funds for April were promoted by iShares. This accounted for total net inflows of €2.5 bn, or 68.52%, of the net inflows into the European ETF segment.
