A survey of Europe’s leading asset managers found that while the European ETF market is rapidly maturing, it faces several challenges. Will ETFs be the game changer for European asset management? Learn what is driving the rise in Europe’s ETF assets and the barriers to overcome.

1. European ETFs coming of age
A survey of Europe’s leading asset managers found that while the European ETF market is rapidly
maturing, it faces several challenges. Will ETFs be the game changer for European asset
management? Learn what is driving the rise in Europe’s ETF assets and the barriers to overcome.
5.1%
European ETFs today
7.0
10
9
billion
8
7
growth
rate in
2012
European ETFs net inflows hit
US $7.0 billion at an annualized
growth rate of 5.1%
6
5.1%
5
4
during the first half of 2012.1
7.0
$
growth
rate
3
2
billion
1
0
European ETF assets
are worth 3.5%
of the total mutual
funds, compared to
8% in the US.2
3.5%
8.0%
Europe
U.S.
3.5%
of total
mutual
funds
The European ETF Market is
five to ten years behind
the US
Top growth strategies
Expansion and innovation dominate.
¥$
31% expanding to
28% exploring new
new markets
19% launching new
investment strategies
product types
22% capitalizing on new
regulatory structures and
other avenues
Why investor education is critical
57%
58%
21%
78
moderate
growth
%
58% of interview participants
said improved investor
knowledge will drive future
strong
growth
78% said retail investors are
key to growth (21% strong growth
Getting investors to make
their first ETF trade is the
and 57% moderate growth)
single most important factor
retail growth
Barriers to entry
The future
Scale is the major barrier for entry to the European ETF market.
Expansion will be evolutionary,
not revolutionary.
37%
69%
25%
21%
17
57%
Increase
in
products
%
Decrease
in
launches
69% plan to increase the number of products
offered over the next two years by five (19%)
to 10 (50%). Yet, 57% expect the success of
new launches to decline.
Difficult to
compete with
major players
Other
Difficult to
differentiate
15%
Breakeven and
critical size is
difficult to achieve
in 2013
25%
by 2020
Biggest challenges
Regulations
Consolidation
73% say European ETFs have
been unfairly caught in cross
regulation
72% spend five to 10 hours a
week – one full day on average
– dealing with new rules.
Most respondents expect the
top three players to defend or
expand their current market
share of around two-thirds of
European ETF assets.
Yet, 21% expect the top three
to be challenged – probably by
a large entrant from the US.
Competition
42% anticipate more
aggressive price competition.
Retail ETFs are expected to expand from
15% to 25% of all European ETFs assets
over the next several years.
Switzerland
United
Kingdom
Germany
The
Netherlands
France
The United Kingdom, Germany, France,
Switzerland and the Netherlands possess
the largest growth potential.
1 Source: EFTGI research
2 ource: Chartered Institute for Securities Investment, BlackRock, Investment
S
Company Institute, European Fund and Asset Management Association