ETF usage across Europe is predicted to accelerate and the industry will potentially have €1 trillion of assets under management by 2020.
Morningstar said regulatory changes and an increasing preference for low-cost investment solutions were behind the trend.
In the firm’s 2017 ‘A Guided Tour of the European ETF Marketplace’ report, Morningstar also highlighted that assets in European-domiciled ETFs had doubled over the past five years to around €550 billion, standing at par with traditional index funds.
However, Morningstar also found that European retail investors were yet to fully embrace ETFs, though distribution channels were slowly opening. The firm said that the updated Markets in Financial Instruments Directive should aid ETF firms’ retail businesses.
Other findings were:
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- Fixed income ETF market share increased in each of the past five years and stands at over 24% (2011: 16%).
- Physically replicated exchange-traded products represent 77% of the market (2014: 66%).
- Smart beta ETFs assets quadrupled in four years, reaching €43 billion.