The Future of ETFs in the UK and Europe

What does the future hold for ETFs in the UK and Europe given their establishment in the US?

Hortense Bioy, CFA 2 December, 2010 | 9:15AM

It wasn’t long ago, last April to be precise, that exchange-traded funds (ETFs) celebrated their tenth anniversary in Europe. And over the last decade, they have enjoyed incredible growth. There are today 1,352 ETFs listed in 18 European countries, outpacing the 1,075 listed in the United States, according to Morningstar data.

In recent years, the European ETF landscape has also dramatically changed with the emergence of new players--there are currently 32 providers--and the proliferation of a slew of innovative and sometimes rather complex products. However, in terms of assets and trading volume, Europe still has a long way to go to catch up with its American counterpart. The EUR 216 billion European ETF market represents only a third of the size of the US ETF market, and daily on-exchange turnover is 20 times lower. So the question that comes to mind is: What does the future hold for ETFs in the UK and Europe, given their establishment in the US?

Plenty of Room to Grow
Industry participants all agree that the growth potential in Europe remains tremendous given the many advantages that ETFs offer over traditional actively-managed mutual funds, including low costs, intra-day liquidity and access to new asset classes.

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About Author

Hortense Bioy, CFA

Hortense Bioy, CFA  is director of passive fund research in Europe.

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