ETP Market Roars Ahead in Europe

LOW-COST FUNDS: Local money is flooding into ETFs, defying critics who said active management would win out when the bull market returned

Jose Garcia Zarate 4 July, 2014 | 10:21AM
Facebook Twitter LinkedIn

Investor interest in exchange-traded products (ETPs) in Europe has experienced a dramatic upswing in the first half of 2014. According to preliminary data calculated by Morningstar, the ETP market has been the recipient of EUR 23 billion net inflows in the first six months of the year. This is more than double the total net inflows for the whole of 2013. Meanwhile, total assets under management (AUM) in ETPs stood just shy of EUR 342 billion at the 2014 mid-point, up 13% from year-end 2013.

Passive Funds Attract Money in Bull Market

Should this trend continue apace in the second half of 2014, the European ETP market would be firmly on course to register net inflows on a par with those seen in the 2008-2010 period, and - capital appreciation permitting - a marked jump in total assets under management. This would run counter to the predictions of many critics of passive investing – and in particular of ETPs – who argued that strong growth of this type of investing was a direct consequence of the global economic crisis and would deflate once active managers were again in a position to sell the virtues of a bull equity market. The poor net inflows experienced in 2013 relative to previous years seemed to give credence to this theory. In fact, many a headline at the start of 2014 asserted that the ETP market in Europe had plateaued. Well, it seems not!

A Great Rotation?

A breakdown of the H1 2014 data shows that some EUR 13 billion of new money has been placed in equity ETPs and EUR 10 billion in fixed income products. Meanwhile, commodity and money market ETPs have experienced a mild net outflow of EUR 200 million each over the period. In AUM terms, equity ETPs amounted to EUR 233 billion (68% of the total ETP market); fixed income accounted for EUR 69 billion (20% of total); while commodities came in at EUR 31 billion (9% of total). The remaining 3% of the total AUM was placed in what Morningstar terms as “alternative”; a category that includes all types of leverage/inverse products as well as currency instruments. 

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

About Author

Jose Garcia Zarate

Jose Garcia Zarate  is Associate Director of Passive Strategies Research for Morningstar Europe

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies       Modern Slavery Statement