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The assets under management in the European exchange-traded fund (ETF) industry increased from €444.3 bn to €457.4 bn during November. This increase of €13.1 bn was driven mainly by the performance of the underlying markets (+€10.0 bn), while net sales contributed €3.1 bn to the overall assets under management in the ETF segment. With regard to the overall number of products, it was not surprising that equity funds (€334.8 bn) held the majority of the assets, followed by bond funds (€105.6 bn), commodity products (€13.1 bn), “other” funds (€6.4 bn), alternative UCITS products (€0.6 bn), mixed-asset products (€0.4 bn), and real estate funds (€0.03 bn).

Graph 1: Assets Under Management in the European ETF Segment by Asset Type, November 30, 2015 (Euro Millions)

15 12 14 Graph 1 Mkt Share by AUM

Source: Thomson Reuters Lipper

Fund Flows by Asset Type

With regard to the overall market conditions during November, it was not surprising that equity funds (+€2.2 bn) enjoyed the highest net inflows for the month, followed by bond funds (+€1.2 bn), commodity products (+€0.1 bn),”other” funds (+€0.1 bn), and real estate products (+€0.004 bn) as well as mixed-asset products (+€0.0003 bn). In contrast, money market funds (-€0.5 bn) suffered the highest net outflows, bettered somewhat by alternative UCITS funds (-€0.001 bn).

The flows for November drove the overall net flows in the European ETF segment to a healthy €65.9 bn for the year to date.

Graph 2: Estimated Net Sales, November 2015 (Euro Millions)

15 12 14 Graph 2 ENS by Asset Type

Source: Thomson Reuters Lipper

Assets Under Management by Lipper Global Classifications

With regard to the Lipper global classifications, the European ETF market was split into 164 different peer groups. The highest assets under management were held by funds classified as Equity US (€65.2 bn), followed by Equity EuroZone (€48.3 bn), Equity Europe (€29.3 bn), and Equity Global (€25.8 bn) as well as Equity Germany (€20.8 bn). These five peer groups accounted for 41.38% of the overall assets under management in the European ETF segment, while the ten top classifications by assets under management accounted for 58.97%. Overall, 19 of the 164 peer groups each accounted for more than 1% of the assets under management. In total, these 19 peer groups accounted for €329.7 bn or 72.08% of the overall assets under management. These numbers showed that the assets under management in the European ETF industry are highly concentrated.

Graph 3: Ten Top Lipper Global Classifications by Assets Under Management, November 30, 2015 (Euro Millions)

15 12 14 Graph 3 Top LGC by AUM

Source: Thomson Reuters Lipper

The peer groups on the other side of the table showed that some funds in the European ETF market are quite low in assets and may face the risk of being closed in the near future. They are obviously lacking investor interest and might therefore not be profitable for the respective fund promoters.

Graph 4: Ten Smallest Lipper Global Classifications by Assets Under Management, November 30, 2015 (Euro Millions)

15 12 14 Graph 4 Smallest LGC by AUM

Source: Thomson Reuters Lipper

Fund Flows by Lipper Global Classifications

With regard to the overall sales for November, it was not surprising that the peer groups in the ten best selling Lipper classifications were spread over the different asset classes. That said, the first three—Bond EUR Corporates (+€0.6 bn), Equity Global (+€0.6 bn), and Bond Europe High Yield (+€0.6 bn)—accounted for 57.21% of the overall sales during November. These numbers showed that the European ETF segment is also highly concentrated with regard to fund flows by sectors. Generally speaking, one would expect the flows in the European ETF segment to be concentrated, since investors often use ETFs to implement their market views and short-term asset allocation decisions; these products are made for and therefore are easy to use for these purposes.

Graph 5: Ten Top Lipper Global Classifications by Estimated Net Sales, November 2015 (Euro Millions)

15 12 14 Graph 5 Top Selling LGCs

Source: Thomson Reuters Lipper

On the other side of the table, the ten peer groups with the highest net outflows amounted to €2.1 bn of outflows. With regard to the general market conditions, it was not surprising to see categories such as Bond EMU Government Short-Term (-€556 m), Money Market EUR (-€392 m), and Equity Eurozone (-€294 m) facing net outflows.

Graph 6: Ten Worst Selling Lipper Global Classifications by Estimated Net Sales, November 2015 (Euro Millions)

15 12 14 Graph 6 LGC Outflows

Source: Thomson Reuters Lipper

Assets Under Management by Promoters

A closer look at the assets under management in the European ETF industry by promoters also showed high concentration, since only 19 of the 48 ETF promoters in Europe held assets above €1.0 bn. The largest ETF promoter in Europe—iShares (€229.5 bn)—accounted for 49.45% of the overall assets under management, far ahead of the number-two promoter—db x-trackers (€55.9 bn)—and the number-three promoter—Lyxor (€47.5 bn).

Graph 7: Ten Top ETF Promoters by Assets Under Management, November 30, 2015 (Euro Millions)

15 12 14 Graph 7 Top Promoter AUM

Source: Thomson Reuters Lipper

The ten top promoters accounted for 92.85% of the overall assets under management in the European ETF industry. This meant in turn that the other 38 fund promoters registering at least one ETF for sale in Europe accounted for only 7.15% of the overall assets under management.

Fund Flows by Promoters

Since the European ETF market is highly concentrated, it is no surprise that seven of the ten largest promoters by assets under management were also among the ten top-selling ETF promoters for November. iShares, with net sales of €1.8 bn, maintained its position as the best selling ETF promoter in Europe, followed by Source (+€0.5 bn) and db x-trackers (+€0.4 bn).

Graph 8: Ten Best Selling ETF Promoters, November 2015 (Euro Millions)

15 12 14 Graph 8 Top 10 Promoter ENS

Source: Thomson Reuters Lipper

Since the flows of the ten top promoters accounted for 124.73% of the overall estimated net flows into ETFs in Europe for November, it is clear that some of the 48 promoters (11) faced net outflows (-€0.9 bn in total) over the course of November.

Assets Under Management by Funds

There were 2,081 instruments (primary funds and convenience share classes) listed as ETFs in the Lipper database at the end of November. With regard to the overall market pattern it was not surprising that the assets under management on the ETF level were also highly concentrated. Only 104 of the 2,081 instruments held assets above €1.0 bn. These products accounted for €266.1 bn or 58.18% of the overall assets in the European ETF industry. The ten largest ETFs in Europe accounted for €84.2 bn or 18.42% of the overall assets under management.

Graph 9: Ten Largest ETFs by Assets Under Management, November 2015 (Euro Millions)

15 12 14 Graph 9 Top 10 Funds by AUM

Source: Thomson Reuters Lipper

ETF Flows by Funds

A total of 572 of the 2,081 instruments analyzed in this report showed net inflows for November, accounting for €11.3 bn or more than three times the overall net flows. This meant in turn that the other 1,509 instruments faced no flows or net outflows for the month. In more detail 23 of the 572 ETFs posting net inflows enjoyed inflows of more than €100 m each during November, summing to €4.4 bn. The best selling ETF for November, iShares Euro High Yield Corporate Bond UCITS ETF, accounted for net inflows of €572 m or 18.33% of the overall inflows, followed by iShares Core S&P 500 UCITS ETF (+€402 m) and iShares Core Euro Corporate Bond UCITS ETF (+€381 m).

Graph 10: Ten Best Selling ETFs, November 2015 (Euro Millions)

15 12 14 Graph 10 Top Ten Funds by ENS

Source: Thomson Reuters Lipper

The flow pattern at the fund level showed the concentration even better than the statistics on the promoter or classification level. Overall, six of the ten best selling funds for November were promoted by iShares and accounted for net inflows of €1.9 bn.

Detlef Glow

Detlef Glow is Head of EMEA Research at Lipper, a Thomson Reuters flagship brand. In this position he is responsible for the Lipper research reports on the European ETF industry and special research reports on newsworthy market topics. Besides these tasks, he is acting as spokesperson for Lipper on TV and in print media, as well at conferences and expert panels. Detlef joined Lipper in mid 2005 from Feri Wealth Management, where he was Director of Portfolio Management, managing segregated accounts for high net worth individuals (HNWI). Prior to this he spent nine years with Tecis Holding AG, most recently as Head of Fund Research for Tecis Asset Management AG. In this role he was responsible for the quantitative and qualitative fund research for the Tecis fund of funds, the HNWI accounts and the recommendation list of funds for the financial adviser arm of Tecis. Detlef has an MBA focusing on Financial Services from the University of Wales/Cardiff, as well as a BA in Business Administration.”

Website: www.lipperweb.com

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