BlackRock is predicting that European exchange traded funds will pass the USD1 trillion milestone in assets in less than five years. The prediction comes as BlackRock marks the 15th anniversary of the launch of the first European ETFs by iShares.
The first ETFs to list in Europe were two European equity ETFs on Deutsche Börse on 11 April 2000 – the iShares STOXX Europe 50 UCITS ETF and iShares EURO STOXX 50 UCITS ETF. This was quickly followed by the first ETF to list on the UK’s London Stock Exchange on 28 April 2000, the iShares Core FTSE 100 UCITS ETF.
There are now 2,269 different exchange traded products in Europe, listed in 22 countries across the continent by 45 different providers. The industry holds USD494 billion in assets and the original UK ETF, iShares Core FTSE 100 UCITS ETF, has grown to become the largest UK equities ETF with GBP3.7bn in assets under management.
BlackRock’s Rachel Lord, Head of EMEA iShares, says: “ETFs are one of the success stories of twenty-first century investing in Europe. In just 15 years, this financial market has grown from scratch into an industry on the cusp of USD500 billion, by providing levels of efficiency, transparency and value-for-money that have democratised investing for those across the continent.
“ETFs domiciled in Europe continue to grow rapidly, despite recent economic and geopolitical uncertainties. In fact, the growth in uptake of ETFs here is far higher than the global average, and Europe is a major contributor to the shape and size of the global market. European ETFs will surpass USD500 billion any day now, and by 2019 when the industry emerges from its teenage years, we expect them to be greater than USD1 trillion within a global market of USD6 trillion.
“There have been many developments over this time, especially from funds tracking niche and alternative markets like commodities and real estate. Alongside ongoing innovation in areas such as smart beta, we believe investors will continue to turn to ETFs when choosing their core equity and bond market-weighted investments.
“We see growth coming from investors who have previously deployed capital using products traded over-the-counter – bonds and futures especially – who are turning to ETFs for the first time because of the liquidity and low costs. There is a clear trajectory ahead, and we’re welcoming new European investors to ETFs every day.”
