Lyxor ETF reports that it enjoyed a strong start to 2017, building on growing investor appetite to become Europe’s second largest ETF provider with assets under management of EUR60 billion.
The firm writes that it has secured nearly 15 per cent of all new money flowing into the European market, and 18 per cent of exchange traded volume since the beginning of the year, attracting net new assets of more than EUR5.6 billion.
Lyxor expects the European ETF market to continue its rapid ascent, with 2017 already shaping up as a record year with net new assets of EUR40 billion year to date, almost as much as in the whole of 2016. Arnaud Llinas, Head of ETFs and Indexing for Lyxor Asset Management, predicts that if the trend continues, the European ETF market could break the EUR1,000 billion threshold by 2020.
The firm believes that it is reaping the benefit of investments made in 2016 to adapt to a rapidly-growing ETF market across all client segments. In particular, Lyxor ETF invested in its fixed income range, reaching the number two spot in this segment in Europe by assets under management. Lyxor also added to its sales, marketing and portfolio management teams, doubling its ETF staff in the past four years. Going forward, Lyxor is planning to consolidate its position by capitalising on a strong culture for innovation.
The firm writes that its upcoming initiatives include launching a range of green ETFs starting with the first ever green bond ETF launched in March 2017; completing the range of risk management ETFs designed to help investors protect against rising interest rates, inflation, currency fluctuation and increased volatility and launching new UK, US and Japanese Smart Beta dividend products.
In addition, Lyxor is looking to increase its European footprint by raising the proportion of Luxembourg-domiciled funds and increasing the share of physical ETFs to 50 per cent to adapt to the needs of a new, more international client base.
Lyxor writes that its moves on replication and domicile are driven by a pragmatic approach, and a desire to provide the best result for investors on every index they track. Lyxor will also continue to develop active ETF-based investment solutions for the retail distribution sector.
“The passive industry has doubled in size in the past ten years but there is still plenty of room to grow. What has changed today is the ETF market’s ever-growing client reach, as well as investors’ need not just for strategies providing market exposure, but for solutions to specific market challenges such as inflation or changing interest rates. With innovation as the cornerstone of its strategy, Lyxor has initiated important changes in 2016 to adapt to this challenge, which we believe will put us in a position of strength for the future,” Llinas says.