Since 2024 was a record year with regard to the estimated net inflows in ETFs in Europe, it seems to be logical that ETF promoters launched an increasing number of new ETFs to profit even more from the trend toward ETFs. To check if this assumption is true, we analyzed the number of newly launched primary share classes (portfolios) over the course of 2024, as well as the number of merged or liquidated share classes.
The European ETF industry launched 240 new ETFs (primary share classes) over the course of 2024. This marks the second highest number of ETF launches in Europe after the record year 2010, during which 267 new ETFs were launched. At the same time there were 116 ETFs merged or liquidated over the course of 2024—the sixth highest number of ETF closures within a calendar year. With regard to this, it can be concluded that the number of ETF closures was also on an elevated level compared to the long-term average number of ETF closures, which stood at 102 for the period from January 1, 2013, to December 31, 2023. This means the overall number of ETFs available to investors in Europe has been increased by 124 products over the course of 2024.
Graph 1: Number of Launches and Closures of ETFs by Kind of Share Class (January 1, 2000 – December 31, 2024)
Source: LSEG Lipper
With regard to the overall structure of the European ETF industry and the general fund flow trend, it was no surprise to see that equities were the asset type with the highest number of net new ETFs (67) followed by bonds (49 new ETFs), money market (5), alternatives (1), commodities (1), and mixed assets (1).
That said, since the vast majority of fund flows within the bond segment were invested in actively managed bond funds, it looks like the European ETF industry would need to revamp its product offering in this segment to attract more investors. This may mean that the European ETF is either missing specific plain vanilla ETFs which cover the standard markets or actively managed ETFs which promise an outperformance in comparison to the standard markets. But it could also be that it needs a bit of both to attract more flows into bond ETFs.
More generally speaking, even as the number of ETF launches in Europe was at a high level over the course of 2024, one can’t say that the number of new ETFs is too extensive given the fact that we witnessed the market entrance of new ETF promoters in conjunction with record inflows. In addition, one needs to bear in mind that the European ETF industry needs new innovation to build the foundation of its future growth.
This article is for information purposes only and does not constitute any investment advice.
The views expressed are the views of the author, not necessarily those of LSEG Lipper or LSEG.
