European ETF Flows Double

Terry Flanagan

Net flows into exchange-traded funds and products listed in Europe in the first three months of this year were more than double the assets gathered in the same period last year.

ETFs/ETPs listed in Europe had net inflows of $34.97bn in the first quarter of this year, compared to $11.17bn in the first quarter of 2014 according to consultancy ETFGI’s preliminary global insight report for Q1.

As a result, ETFs/ETPs listed globally reached record assets of $2.93 trillion at the end of last month.

Deborah Fuhr, managing partner of ETFGI, said in a statement: “With the European Central Bank beginning quantitative easing investors have allocated the majority of net new assets to European equities.”

Morningstar, the fund researcher, said in its latest bi-monthly magazine in April that the poor performance of global equity funds domiciled in Europe last year was driving flows to ETFs.

In 2014 the global MSCI World benchmark increased 19.5% while the average European Morningstar global large-cap equity fund gained just 13.5%, a 6% under-performance.

“In the buoyant markets of the quantitative easing era, active equity managers are perceived to be slow-reacting, sluggish, and outclassed by nimble low-cost index funds,” added Morningstar. “As a consequence, active equity funds domiciled in Europe are facing increasing redemptions by disillusioned investors who flock to ETFs and open-end index funds at an ever-increasing pace.”

As European ETF flows have grown the German exchange operator, Deutsche Börse, has expanded its suite of indexes with four new short and leveraged DAX products. The performance of the short indices is inversely proportional to the performance of the DAX, so that when the DAX falls by 5%, the ShortDAX x9 rises by 45%, and vice versa.

Meanwhile Boost ETP, the European issuer which specialises in short & leverage exchange-traded products and is owned by WisdomTree Europe, has launched its first unleveraged products – the exchnage-traded commodities track oil, gold and natural gas and are listed in Italy.

Viktor Nossek, director of research for WisdomTree Europe, said in a statement: “The path of US natural gas and crude oil prices ahead is likely to be volatile in the short term, as investors assess the historically low energy prices against an uncertain global macro backdrop. In the longer term, given the discounted prices of crude oil and natural gas, commodities may regain strength as the uncertainty in the Middle East ebbs, emerging markets deleverage, and early signs of Europe recovering translate into a more upbeat sentiment on energy commodities.”

Boost said the launch comes as its platform hit record trading volumes of $754m and a high of $324m in assets under management in March.

Feature image via Rob Hyrons/Dollar Photo Club

Related articles

  1. Tradeweb’s credit trading solutions and data will be integrated into BlackRock’s Aladdin.

  2. Trading Europe From ‘Across the Pond’

    Despite difficult circumstances, demand for SFDR Article 9 funds remained sustained.

  3. Assessing Bond Liquidity
    Daily Email Feature

    Low Touch, High Liquidity

    Janus Henderson traders use a broad spectrum of electronic tools to optimize the search for liquidity.

  4. Florida CFO said ESG standards are being pushed by BlackRock for ideological reasons.

  5. Outlook 2016: Stephen Grainger, SWIFT

    The new regime requires a new investment playbook involving more frequent portfolio changes.