iShares has declared a landmark for European ETFs as its iShares Core S&P 500 UCITS ETF is the first European ETF to surpass USD20 billion in assets. iShares writes that investors seeking an efficient strategic and tactical way to tap into optimism in the US tipped the fund past the threshold, while a thirst for ‘value for money’ and greater transparency continues to fuel investor interest in ETFs as a portfolio construction tool.
US equity ETFs have enjoyed bumper inflows, amassing USD19.3 billion in inflows in January 2017 alone, iShares writes. “This has been driven by a renewed appetite for risk amidst the pickup in the pace of the macroeconomic recovery. Shares in US companies may be attractive for those investors willing to take on more risk than investing in bonds. An improved growth outlook for the US economy and rising earnings estimates for US companies could benefit shares, although the performance of shares and the wider economy do not necessarily move in lock-step.”
Joe Parkin, Head of iShares UK retail and wealth sales, says: “What we hear from our clients is that ETFs allow them to deliver better outcomes within their portfolios, because of the precision, transparency and cost effectiveness that they offer. They have become more ingrained as a tool to express investment views tactically and over the long term, and are being used extensively across asset classes and geographies.
“We believe ETFs have the potential to surpass USD1trillion in assets by 2020 driven by the regulatory drive towards fee-based advice, the growth of digital investment, and investor thirst for a varied investment toolkit that allows them to efficiently navigate an increasingly complex world.”