Forgive me a gentle pun in our headline this week. Particularly excuse me, poor Detlef Glow, who must be resigned to this childish play with his surname, but his extensive and exhaustive report on the European ETF industry published this week did give the industry a truly glowing gold star and was really interesting reading.
Refinitiv’s Glow took on the elephant in the room, almost literally, of the concentration of European ETF assets with one elegantly elephantine player, noting that while, generally speaking, he would agree with the statement that one needs to be concerned if a few players are dominating a market, this seems not to be true with regard to the European ETF industry.
Glow notes that iShares, the largest ETF promoter in Europe, accounts in all six periods for nearly half of the assets under management held by the 10 top promoters combined.
“Despite the fact that the respective market share from iShares compared to the combined market share of the other nine promoters of the top 10 has declined over the analysed six-year period, it has maintained a very dominant market position,” Glow comments. “In any other industry, such a high concentration would be concerning for regulators and clients, as this may lead to a monopoly or an oligopoly, which might bring prices up and/or quality down. In other words, this means it would require a merger of all nine promoters to create a new rival for iShares as the most dominant player in the European ETF industry. Such a move, however, would create an even larger gap between the two top ETF promoters and the rest of the European ETF industry.”
However, he comments that, rather than the aforementioned scenario, he sees falling management fees and a very good quality of products in terms of their tracking of the underlying indices. He concludes: “Compared to their actively managed peers, the European ETF industry looks way more competitive than the European fund industry overall.”
Thematic ETFs have seen enormous growth globally over the past few years and Global X has published its latest European thematic report which finds that their demand remains strong, with climate change dominating. Meanwhile, Brown Brothers Harriman also published their annual review of ETFs and their survey of Greater China which finds that there is a huge increase in uptake and appetite for ETFs.
Crypto products remain all the rage and WisdomTree in the US has created an advisory series of model portfolios designed to help their financial adviser audience get their clients into cryptocurrencies. The +Crypto Model Portfolios are a collaboration with Onramp Invest which features Gemini integration. Will Peck, Head of Strategy and Emerging Technologies at WisdomTree Asset Management, explains that there is definitely a desire for more understanding of crypto assets but they just aren’t accessible, particularly in the US. “This is a great way to demonstrate how you can use crypto in a well-diversified portfolio,” he says. The crypto assets here are bitcoin and Ethereum, chosen because they are the largest and the most established of cryptocurrencies at the moment.
A survey conducted in the UK this week found the independent financial adviser’s appetite for all things crypto for their clients might be a little more subdued. An overwhelming majority of IFAs, at 93 per cent, would never consider recommending cryptocurrencies or meme stocks (95 per cent) to their clients, according to insight from Opinium.
The research, conducted among 200 UK IFAs, finds a third (34 per cent) of IFAs have seen an increase in clients asking about cryptocurrencies this year, while 14 per cent have had more requests about meme stocks compared to last year.
However, nine in 10 (91 per cent) IFAs would be concerned if a client said they were investing in either cryptocurrencies or meme stocks. This concern is mirrored across those who advise clients of all portfolio sizes. Can this result have anything to do with the fact that there is no easy and regulated access to cryptocurrencies in the UK at the moment? Asking for a friend.
We have a little teaser from Sage Advisory this week, a few highlights from their latest annual stewardship report which finds that there is a very high level of focus on diversity, equity and inclusion within the ETF industry. The full report is due early July.
Finally, I am very pleased to bring you the results of our recent arrangement with trackinsight – I should say the newly revamped trackinsight if you have seen their new website. We will be publishing the top 10 ETF performers and bottom 10 ETF performers globally from trackinsight each week from now on. You will find the first outing here:
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Managing Editor, ETF Express
Companies in this issue
Brown Brothers Harriman
WisdomTree Asset Management