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Morningstar’s Q4 2020 European ETF asset flows report finds record breaking levels in ESG and thematics


Morningstar reports in its European ETF Asset Flows Update for the fourth quarter of 2020 that European ETFs closed 2020 breaking through the EUR1 trillion barrier in assets. 

Inflows in the fourth quarter amounted to EUR44.4 billion, pushing the total for the year to EUR102.7 billion. This was the second year in a row of flows over the EUR100 billion mark, Morningstar says.

Environmental, social, and governance (ESG) ETFs were the big winners in the fourth quarter, netting EUR20.8 billion of inflows. Morningstar writes that assets in 2020 grew by a massive 137 per cent from 2019 to EUR 90.4 billion and already account for 8.6 per cent of assets in ETFs in Europe. 

Flows into equity ETFs accelerated strongly in the fourth quarter to EUR38.3 billion and totalled EUR53.3 billion in 2020. Assets in equity ETFs in 2020 amounted to EUR637.5 billion, up 12.2 per cent from 2019.

Bond ETFs netted EUR9.7 billion in the fourth quarter and EUR36.9 billion in 2020. Assets in bond ETFs in 2020 grew to EUR268 billion, up 14.9 per cent from 2019. Thematic ETFs attracted a record EUR9.5 billion of inflows across the year. In the fourth quarter alone, they scooped up EUR4.1 billion, strongly up from EUR2.3 in the third quarter. Assets in thematic ETFs closed 2020 at an all-time high of EUR 22.7 billion.

iShares topped the flows league in the fourth quarter with EUR22.3 billion, up from EUR10.4 billion in the third quarter. It also topped the flows league for the year with EUR51.1 billion. The provider retains an unassailable share of 44.3 per cent of the European ETF marketplace and in 2020 benefited from flows into its expanding suite of ESG products, Morningstar writes. 

Jose Garcia-Zarate, Associate Director of Passive Strategies Research, says: “The European ETF market—inclusive of exchange-traded commodities—closed 2020 on a high, attracting EUR44.4 billion of inflows in the fourth quarter. During this period, assets under management grew by 11 per cent to EUR1.05 trillion. This is a major milestone for an industry that is only two decades old in Europe and will surely make plenty of headlines to highlight the growing appeal of low-cost passive investing. In fact, assets in ETFs in Europe have doubled in the last five years and the outlook remains positive overall. 

“ESG ETFs were the big winners in the fourth quarter, attracting EUR20.8 billion of inflows, up from EUR9.5 billion in the third quarter. This accounted for 47 per cent of total money into ETFs in the fourth quarter. Assets in ESG ETFs at the end of 2020 amounted to EUR90.4 billion, a staggering 137 per cent increase from EUR38 billion in 2019.”

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