Strong Growth Expected in European ETF Market

 Source, one of the largest providers of Exchange Traded Products (ETPs) in Europe, has launched a multi-million pound advertising and marketing campaign to help raise its profile, as new research reveals financial advisers are set to increase their clients’ exposure to these investment products.

Source is already capitalising on this market growth as it reveals today that it has attracted US$3.4 billion of assets so far this year (as of 15 September 2015), equivalent to 20% of the firm’s assets under management at the beginning of the year. Just over half of this (US$1.8bn) has been into fixed income ETFs, with US$1.3 billion into equity ETFs and US$0.3 billion into commodity products.

Most of the European investment in ETFs comes from institutional investors, but Source is forecasting that there will be a significant increase in demand from retail investors, primarily through their advisers.
New research[1] from Source reveals that over the past 12 months, nearly one in five (18%) financial advisers say their clients have increased their exposure to ETFs as opposed to 3% who have seen clients reduce it. Over the next year, one in three (34%) IFAs expect clients to increase their exposure to these investment products compared to 4% of IFAs who anticipate exposure will fall. Some 59% of IFAs say that lower charges give ETFs an advantage over other investment funds, and this was followed by 21% who said it was about innovation, and 13% who cited the wide choice of ETFs available.

These findings are supported by new data from the London Stock Exchange (LSE), which reveals there are currently more than 1,200 ETFs and ETPs listed on its main exchange and that the total value of ETFs traded on-exchange this year is £175.7 billion.

Gillian Walmsley, Head of Listed Products at the LSE, said: “London has long been seen as the capital of the ETF industry in Europe, with deep liquidity and a strong emphasis on promoting transparency. In 2015, 101 new ETFs and 25 new ETPs listed on the LSE. Total on-exchange value traded for ETFs this year is up 61% compared to the same period last year.”