European ETF assets remain highly concentrated in top 10 funds

Jun 28th, 2016 | By | Category: ETF and Index News

The last four months have seen strong asset growth in European-based exchange-traded funds, but the majority of investor assets are still highly concentrated in just a handful of funds, according to new data.

ETF intraday prices and trading show insight into market conditions

The majority of European ETF assets remain in the Top 10 biggest ETFs

Total European ETF assets hit €454.6bn at the end of May across 2,000 exchange-traded instruments, but according to data from Thomson Reuters Lipper, the 10 largest ETFs in Europe account for just over 17% (€77.8bn) of the total market.

Lipper data also discovered that only 96 of the 2,118 exchange-traded instruments contain more than €1bn in assets.

The largest funds are all in mainstream equity markets, bar one. Most of the top 10 ETFs are from iShares and several of them were among the first ETFs to launch in Europe, allowing for a long build-up of asset growth over the last decade and more.

Out of the 10 largest ETFs, the biggest by far is the iShares Core S&P 500 UCITS ETF (LSE: CSPX) at around €13bn (nearly 3% of total European ETF assets). Its price tag has recently been cut from 0.40% to just 0.07%, encouraging more inflows. Although year-to-date performance is in the red, solid returns over 11% have been gained over three- and five-years.

Second to the top spot and tracking the same market is the Vanguard S&P 500 UCITS ETF USD (LSE: VUSD). It also costs 0.07%, and has gathered strong inflows while the iShares competitor maintained a higher price tag.

Meanwhile the iShares S&P 500 UCITS ETF (Dist) (LSE: IUSA) is the more surprising entry at number four in terms of assets because it still costs 0.40%. Despite the higher fee, it has amassed almost €8bn since launch.

German equities comes in third place, with around €8 billion assets in the iShares DAX UCITS ETF (Xetra: DAXEX), the first ETF in Europe to track this market. Although Germany is considered the engine of the Eurozone, its performance has been struggling, with a major drop of 13.2% returns YTD.

The Lyxor Euro STOXX 50 UCITS ETF (D-EUR) (Paris Euronext: MSE) is another example of the first mover having the advantage. It tracks an index of 50 blue chip European equities and was the first of its kind to launch in 2001, gathering over €7bn. Like German equities, overall European stocks have not fared well YTD, dropping 15.7%.

The competing European equities ETF at number six on the top 10 list from iShares (Xetra: SX5EEX) launched two months after Lyxor’s in 2001. It has a cheaper annual fee of 0.16% but about €1bn less in assets.

Bonds also make an appearance in the top 10 amongst nine other equity ETFs. The iShares Core Euro Corporate Bond UCITS ETF (LSE: IEAC) costs 0.20% per year and has delivered positive returns of over 4.6% in the last 12 months.

Global equities have performed much better than European stocks over the last 12 months. The iShares Core MSCI World UCITS ETF (LSE: SWDA) has delivered more than 6% both YTD and over the past 12 months. The fund is part of iShares’ cheaper “Core” range and costs 0.20%.

The last two funds on the top 10 list both track European equities and are iShares funds, but have delivered completely different returns, emphasising the need to be selective. The iShares STOXX Europe 600 UCITS ETF is in the red at minus 13.6% YTD and minus 17% in one year, while the iShares MSCI Europe UCITS ETF (LSE: IMEU) has only lost around 1.8% and 5.3%, respectively.

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