BlackRock and Vanguard captured the lion’s share of ETF flows in Europe last year as investors opted for low-cost passive strategies amid a turbulent market environment while DWS and PIMCO suffered outflows.
According to data from Bloomberg Intelligence, UCITS ETFs saw €80.1bn inflows in 2022 outpacing mutual fund flows in every month until November, a sign of the ETF wrapper’s resilience during one of the most challenging market environments since the Global Financial Crisis in 2008.
It also shows how ETFs are becoming the vehicle of choice for investors across Europe who used the volatility to rotate out of mutual funds and into ETFs.
In particular, core building blocks such as the iShares Core MSCI World UCITS ETF (IWDA), the iShares Core S&P 500 UCITS ETF (CSPX), the Xtrackers DAX UCITS ETF (DBXD) and the Vanguard FTSE All-World UCITS ETF (VWRL) were among the strategies that captured the most inflows over the past 12 months.
Amid this demand for broad-based ETFs, Vanguard was the standout performer in 2022, seeing €11.3bn inflows across its 34-strong European ETF range.
The US giant saw particular demand across three products, VWRL, the Vanguard S&P 500 UCITS ETF (VUSA) and the Vanguard FTSE All-World High Dividend Yield UCITS ETF (VHYL), which saw a combined €6.1bn inflows.
Henry Jim, ETF analyst at Bloomberg Intelligence, said this indicates investors are “looking for a place to hide” in broad ETFs.
Elsewhere, the ever-present BlackRock saw the highest inflows across all ETF issuers in Europe with €43bn inflows, over 50% of the entire market flows in 2022.
This takes their overall assets under management (AUM) to €576bn as investors turned to US Treasury ETFs including the iShares $ Treasury Bond 7-10yr UCITS ETF (IBTM) and iShares $ Treasury Bond 3-7yr UCITS ETF (CBU7) which saw $4.7bn and $3.2bn inflows, respectively.
Source: Bloomberg Intelligence
There were also strong years for BNP Paribas Asset Management and JP Morgan Asset Management which collected €4.7bn and €2.8bn inflows, respectively.
Behind BlackRock and Vanguard, the duo had the strongest years in terms of flow per ETF with JPMAM’s AUM climbing to €9.6bn and BNPP AM’s hitting €26.3bn.
JPMAM’s strong year highlights the increasing demand for active ETFs this side of the pond. According to a recent survey of professional investors conducted by ETF Stream in partnership with JPMAM, some 58% of respondents believe 2023 will be the year of active management, a potential boon for active ETFs.
Furthermore, Amundi and Invesco also had strong years with inflows of €7.6bn and €6bn, respectively.
Last year, the French asset manager kicked-off the process of merging the Lyxor ETF range with Amundi equivalents as it looks to realise economies of scale following the completed acquisition of its rival in January 2022.
At the other end of the spectrum, Amundi’s rival for the number two spot in Europe, DWS, had a challenging year. The German asset manager saw outflows of €4.4bn driven by waning demand for its Euro Stoxx 50 ETF. DWS currently has €132bn AUM versus Amundi’s €194bn.
Meanwhile, heavy outflows from its short-duration US ETF meant PIMCO suffered €2bn net redemptions as investors opted for more duration over the course of 2022.
Related articles
As someone deeply immersed in the financial markets and investment landscape, I've closely followed the evolution and growth of ETFs (Exchange-Traded Funds) over the years. ETFs have gained immense popularity due to their diversified exposure, low costs, and flexibility. Here's an analysis and breakdown of the concepts and entities mentioned in the article:
-
BlackRock and Vanguard: These are two of the world's largest asset management companies. They've been pivotal in popularizing ETFs globally. Their vast array of ETF offerings, along with strong branding and trust, has consistently attracted significant inflows.
-
ETF Flows: Refers to the net amount of money moving in or out of ETFs. Positive flows indicate more money coming into ETFs, while negative flows suggest money is leaving.
-
UCITS ETFs: UCITS stands for Undertakings for the Collective Investment in Transferable Securities. These are European Union-based mutual funds that can be sold cross-border within the EU. UCITS ETFs have certain regulations they must adhere to, making them attractive to a broad range of investors due to their regulatory oversight.
-
Mutual Funds vs. ETFs: While both are investment vehicles, ETFs often have lower costs, more liquidity, and can be traded throughout the day on exchanges like stocks. Mutual funds, on the other hand, are priced once a day after the market closes and might have higher fees.
-
iShares, Xtrackers, and Vanguard: These are brands under which ETFs are offered:
- iShares: Managed by BlackRock, iShares is one of the largest ETF providers globally.
- Xtrackers: Part of DWS Group, formerly Deutsche Asset Management, it's another significant player in the European ETF market.
- Vanguard: Known for its low-cost index funds and ETFs, Vanguard has a strong reputation among retail investors.
-
Products: Specific ETFs like the iShares Core MSCI World UCITS ETF (IWDA), iShares Core S&P 500 UCITS ETF (CSPX), Xtrackers DAX UCITS ETF (DBXD), and Vanguard FTSE All-World UCITS ETF (VWRL) are among the popular ETFs attracting significant inflows due to their exposure to broad market indices.
-
Assets Under Management (AUM): A metric used to quantify the total market value of assets managed by a financial institution or entity. For instance, BlackRock's AUM in ETFs grew to €576bn, highlighting its dominant position in the European ETF market.
-
Active vs. Passive Management: Active management involves a hands-on approach where fund managers aim to outperform the market. In contrast, passive management, typically associated with ETFs, aims to replicate the performance of a specific index. The shift towards active management in 2023, as indicated by the survey, suggests a potential shift in investment strategies.
-
BNP Paribas Asset Management, JP Morgan Asset Management, Amundi, Invesco, DWS, and PIMCO: These are other significant asset managers in Europe. Each has its strengths, strategies, and areas of focus within the investment landscape, as highlighted by their respective inflows or outflows.
-
Euro Stoxx 50 ETF: This is an ETF that tracks the performance of the EURO STOXX 50 Index, which comprises 50 large, blue-chip European companies.
In summary, the article underscores the growing dominance of ETFs, particularly from giants like BlackRock and Vanguard, in Europe. The trends suggest a shift towards passive strategies, but there's also a noticeable demand and potential resurgence in active management strategies.
