IMPower FundForum takes place from 23-25 June in Monaco this year. Ahead of the event, now in its 35th year, we spoke to some of the participants about various panel topics including industry growth and regulatory trends.
ETFs in Europe are now 25 years old. That’s a milestone for any relationship but for ETFs in particular it represents a quarter of a century of innovation, evolution, and growth.
Starting as purely passive plays, ETFs were immediately recognised as a better way to equities cash quickly within a portfolio. In Europe, the products were initially adopted by the institutional investing community as buy and hold securities that were a cheaper and more efficient way of getting quick access to a major market index.
This was far from the expectation and experience from the US where we had seen a much more retail based audience for ETFs. Over time, ETFs began to be seen less as vehicles to deliver passive exposure and more as vehicles which can deliver any kind of exposure.
Today, with an incredible two and a quarter trillion dollars invested in European ETFs, the industry has been transformed from a community of simple index trackers to an entire ecosystem of strategies, all delivering the transparency, liquidity and ease of price discovery that the ETF wrapper facilitates.
At US Bank, we have had a privileged view of that evolution. Servicing almost 800 products in the US allows us a unique vantage point where we can see trends as they unfold.
Today, the US market is replete with new products, none of which reflect the passive nature of earlier ETFs. Everything is active, delivering outperformance across markets ranging from equity to fixed income to crypto.
If we follow conventional wisdom and accept that what we see in the US is sure to be replicated in Europe, we are likely to see more active managers come to Europe with strategies that will test regulators, administrators and APs in how they fit into Europe’s structures and markets. The only certainty is that the products will arrive and the industry will adapt to make room.
Tony O’Brien, chief commercial officer at custodian and fund administrator US Bank
