(The author is Head of EMEA Research at Thomson Reuters fund research firm Lipper. The views expressed are his own.)
By Detlef Glow
The exchange-traded fund (ETF) market has shown strong growth since its inception in Europe. Many fund promoters have sought to capitalise on this, seeking to differentiate themselves from rivals and match client needs by injecting some innovation into their product offerings. This has led to a broad variety of ETFs competing for assets, both in terms of asset classes and replication techniques.
Looking at assets under management, however, the European ETF market is still highly concentrated. The five top promoters account for more than 75 percent of the entire industry. On a fund-by-fund basis the concentration is even greater.
The ten top funds by assets under management (AuM) account for 25.68 percent of the overall total, while the largest fund in the European ETF universe, iShares DAX, accounts for 11.624 billion euros or 4.75 percent of the overall market.
A closer examination of the AuM shows that only 47 of the 1,727 ETFs registered for sale in Europe hold assets above one billion euros. These funds account for 49.92 percent of the overall assets under management and are highly profitable “bread and butter” products for their fund promoters.