The European exchange-traded fund (ETF) market reached a “record” high last year as overall inflows surpassed €100 billion for the first time, according to new data.
Overall, European ETFs accounted for more than 7% of the industry’s assets, with total assets reaching €870 billion – an increase of 40% from the previous year.
Lyxor ETF Research, which carried out the study, put this down to accelerated growth in Europe over the past five years.
There was a boom across the environmental, social and governance (ESG) segment, fuelled by regulatory changes and a growing need for sustainable investment vehicles across the investor spectrum.
ESG-focused ETFs collected a “record” €16.5 billion of net new assets in 2019, bringing the total to €30.5 billion.
Equity ETFs – which have the lion’s share of the market at 69% – suffered a volatile year as European markets bore the brunt of rising macro-economic uncertainties.
The threat of a no-deal Brexit hung heavy in the first half, but the second half saw a sharp rebound on the back of easing trade tensions. ETFs benefited from the rebound gathering €46 billion, while active equity funds suffered outflows of €43 billion.
Fixed income, which makes up 27% of the market saw total inflows of €54 billion, bringing total assets to €234 billion, up from €152 billion in 2018.
There were also strong inflows into equity sector and thematic funds, according to the study.
European domiciled Equity sector and thematic funds and ETFs benefited from strong inflows (€20.4 billion), predominantly in thematic sectors such as ecology, infrastructure and water.
There was a marked rotation among sector funds and ETFs. Financial Services suffered from the greatest outflows (€-2.8 billion), while Utilities (€ 3.9 billion), Technology (€2.7 billion) and Healthcare (€2.3Bn) benefited the most.
Vincent Denoiseux, head of ETF research and solutions at Lyxor Asset Management said: “ETF market share has consistently risen over the past two decades, underlining the increasing adoption among European investors.”
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