“It is not surprising that more and more global asset managers are building ETF offerings, as they are recognising this distribution opportunity,” stated Detlef Glow, head of Lipper EMEA research at the London Stock Exchange Group, in the European ETF Yearbook published last week. Photo: Lipper LSEG

“It is not surprising that more and more global asset managers are building ETF offerings, as they are recognising this distribution opportunity,” stated Detlef Glow, head of Lipper EMEA research at the London Stock Exchange Group, in the European ETF Yearbook published last week. Photo: Lipper LSEG

Despite global challenges, resulting in a year of robust growth with a substantial €155.6bn in net inflows in 2023 and AUM reaching €1.564trn, the European ETF industry saw significant success. Lipper’s Detlef Glow argues that global asset managers are increasingly recognising the distribution opportunity.

The European exchange-traded fund industry experienced substantial growth in 2023, as outlined in the LSEG Lipper European ETF Yearbook 2024 by Detlef Glow, head of Lipper EMEA Research at the London Stock Exchange Group, on Thursday 11 April.

According to Glow, ETF promoters in Europe saw a remarkable estimated net inflow of €155.6bn for the year, indicative of the sector’s resilience and expansion. Assets under management within the European ETF industry surged to a record high of €1,563.5bn in 2023, marking a notable increase over the year and underscoring the industry’s robust performance. The majority of these assets, amounting to €1,119.0bn, were attributed to ETFs classified under article 6 of the Sustainable Finance Disclosure Regulation.

Within the ETF segment, equity ETFs emerged as the leading category in terms of AUM, particularly in the active ETF segment, reaching €14.3bn by the end of 2023. Equity ETFs also recorded the highest estimated net inflows for the year, amounting to €92.7bn, highlighting investor confidence in this asset class.

Top performers

The top-selling Lipper global classification for 2023 was equity global, attracting estimated net inflows of €34.5bn, followed closely by equity US with €30.1bn and equity emerging markets global with €10.9bn in net inflows. Among ETF promoters in Europe, Ishares secured the top position as the best-selling ETF promoter in 2023, with estimated net inflows of €67.1bn.

Challenges and opportunities

Glow noted that despite global market challenges in 2023, the European ETF industry exhibited resilience and continued growth, with key players and segments contributing significantly to its success. However, he cautioned that the regulatory environment, which demands higher transparency from ETFs compared to mutual funds, remains a significant barrier to launching ETF offerings.

Glow elaborated that asset managers need to view ETFs not as a new business but “as an extension of their existing distribution strategy since an ETF offering enables asset managers to reach every type of fund buyer, from large institutions to retail investors, with a single product.” He continued, “This means that ETFs are about to change the whole value chain of the investment industry, since a change in the business models of financial advisors and wealth managers also impacts the business models of fund management companies and the respective asset managers.”

Anticipated changes

Moreover, the rise in ETF-only investors underscores the significance of ETFs as a means to access new clients. Glow pointed out that global asset managers are increasingly recognising this distribution opportunity, especially since the expiration of the Vanguard patent for ETF share classes of existing mutual funds in May 2023. Additionally, regulatory guidelines published by authorities in Ireland and Luxembourg for the launch of ETF share classes further indicate the evolving landscape, said Glow in the report.

The 77-page yearbook is available .

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