DB - Equity Research-Weekly & Monthly European ETF Market Monitors: European ETF industry gets a fresh start in January-continued

February 10, 2012--ETF month in perspective
2012: A fresh start for the European ETF industry
January brought a very strong start to the year for the global (US, Europe and Asia) ETF industry. ETF assets grew by 8.1% over January 2012, a growth rate that surpassed the overall 2011 year growth rate of 3.1%. Global ETF assets reached $1.4 trillion as of the end of January 2011, up from $1.3 trillion at the end of 2011.
Both the US as well as the European ETF industries grew by 8.2% and 6.5%, reaching asset levels of $1.0 trillion and €221.3 billion respectively. Most of the growth came from rebounding equity markets, however, flows accounted for 2.9% of the growth in the US market and for 1.1% of the growth in the European market (US$ terms). Cash flows for the US market totaled $27.1 billion and €2.4 billion for the European market, for the month of January.

The performance of the European ETF market in the first month of 2012 was sharply different from how it ended the previous year. European ETFs registered outflows of €2.2 billion over December 2011, a decline that was largely driven by equity outflows (€1.8 billion). This situation was reversed in January 2012, with equities contributing €1.5 of net inflows towards the new money that flowed into the European ETF industry.

The January 2012 European ETF industry fresh start was mainly driven by two factors. First, overall market conditions improved somewhat, with the Euro Stoxx 50 delivering gains of 4.3%. Better market conditions helped bring ETF investors out of their shell and allocate money back in the equity market. Second, the European Securities and Markets Authority, ESMA, issued its second consultation on ETFs. ESMA’s publication of its views provided comfort to investors as it gave an indication both about the regulatory body’s future intentions as well as its views with regards to perceived ETF risks.

Overall, the ESMA consultation was deemed to be balanced, avoiding any dramatic changes in the European ETF market, especially those that would put it at odds with how mutual funds operate under UCITS. The consultation provided further evidence that ESMA, through ETFs, which are perceived to be the golden standard in the fund industry, is looking to 'tidy-up' a number of wider fund management industry issues, such as tracking capacity and fund construction, primarily pertaining to total return swaps and securities lending practices .

ETF Industry: The month’s investment trends

The US Market: Flows across the board, from domestic to emerging markets

The US ETF industry registered strong cash flows in the first month of the year totaling $27 billion. Investors favor for risky assets continued in January with equities having the lion’s share in cash inflows ($19.3 billion).

US ETF equity flows were quite diversified, with both domestic as well as emerging markets benefiting. US domestic benchmarked equity ETFs brought inflows of $11.5 billion, while emerging market benchmarked equity ETFs saw inflows of $5.7 billion. Sectors also did well, attracting new money totaling $3.2 billion.

Fixed Income ETFs collected a healthy $7.7 billion in cash inflows; a healthy increase over the $6 billion inflows received in December. Commodity ETVs had a positive month, receiving cash inflows in excess of $1.5 billion which is in sharp contrast to last month’s pattern where commodities registered outflows of $2.7 billion.

For more information about analysis and trends in the US ETF market please refer to our US ETF Market Monthly Review.

The European Market: Emerging Markets main flow growth driver

Equity markets across Europe had a very positive run over the month registering advances across the board: DAX (? 9.5%), CAC (? 4.4%), Euro Stoxx 50 (? 4.3%) and the FTSE 100 Index (? 2.0%). Gold and silver spot prices (US$/oz), also appreciated by 9.8% and 17.6% respectively.

The European ETF industry improved on its poor run in December (outflows of €2.1 billion) and received cash inflows of €2.4 billion in January. Most of the flows went into ETFs tracking equity benchmarks (€1.5 billion) with healthy contributions by other asset classes; Fixed Income ETFs (€412 million), commodities (€331 million) and alternatives (€159 million).

Within equities, emerging markets (EM) benchmarks were back in vogue, collecting cash inflows of €904 million in January. The BRIC countries (Brazil, Russia, India & China) collectively pocketed cash inflows of €365 million while ETFs tracking broad benchmarks like the MSCI EM collected €385 million over the same period. Within ETFs tracking developed markets (DM) benchmarks, a clear divergence was visible: ETFs focused on North American region which includes US & Canada received cash inflows of €672 million while ETFs tracking European benchmarks registered outflows of €663 million. ETFs tracking broader DM benchmarks such as MSCI World received net cash inflows of €107 million over the month of January.

ETFs tracking European sectors registered cash inflows of €171 million in January as compared to outflows of €166 million in the month of December.

Despite the positive equity markets and healthy flows, a hint of bearishness continues to persist as evident from the flows into leveraged and inverse products. ETFs providing inverse and leveraged inverse exposure pocketed inflows of €272 million and €282 million in January respectively. On the other hand ETFs providing leveraged exposure registered cash outflows of €332 million.

Fixed Income ETFs registered cash inflows of €412 million over January as compared to outflows of €404 million in December 2011. ETFs tracking corporate debt issuances and sub-sovereigns collected inflows of €588 million and €117 million respectively. Money market & sovereign ETFs registered outflows of €249 million and €144 million respectively.

Commodity ETPs received cash inflows totaling €498 million in January which is marginally higher than the €198 million received in December 2011. Most of the inflows were into products tracking crude oil (€211 million) and diversified commodity indices (€131 million).

ETP investors approached gold products with caution in January, evident from the inflows totaling €56 million which is significantly lower than the €623 million received in December 2011.

ETF comparatives: Mutual Funds, cash equity turnover

European ETF turnover is 8.0% of the region’s cash equities turnover as of the end of January 2012. The equivalent number for the US market stands at 24.5%.

European ETFs comprised 2.8% of the continent’s mutual fund industry, yet ETF cash flows, €17.7 billion from Jan-Nov 2011, was over 1.4x higher than the corresponding unlisted fund flows (- €44 billion). European unlisted mutual funds registered outflows of close to €138 billion in the months of Aug-Nov 2011. Mutual fund industry data as per the European Fund Management Association (EFAMA).

US ETFs comprised 8.1% of the its mutual fund industry, yet ETF cash flows, $113 billion for 2011, was over 4.7x higher than the corresponding unlisted fund flows ($24 billion). Mutual fund industry data as per the Investment Company Institute (ICI).

To request a copy of the report

Source: Christos Costandinides, European Head of ETF Research & Strategy, Deutsche Bank

Europe ETP News
Amundi launches European equities multi smart beta ETF
January 29, 2016--Amundi ETF has launched a multi smart beta ETF offering exposure to European equities.
read more
ESMA updates CRR standard on main indices and recognised exchanges
January 29, 2016--The European Securities and Markets Authority (ESMA) has its Implementing Regulatory Standard (ITS) on main indices and recognised exchanges under the Capital Requirements Regulation (CRR).
read more
ESAs submit a joint letter to the European Commission on cross-selling of financial products in the EU
January 29, 2016--The Chairpersons of the three European Supervisory Authorities (ESAs)-EBA, EIOPA and ESMA-sent a joint letter on cross-selling of financial products to Jonathan Hill, the European Commissioner for Financial Stability, Financial Services and Capital Markets Union.
read more
Monetary developments in the euro area: December 2015
January 29, 2016--The annual growth rate of the broad monetary aggregate M3 decreased to 4.7% in December 2015, from 5.0% in November.
The annual growth rate of the narrower aggregate M1, which includes currency in circulation and overnight deposits, decreased to 10.7% in December, from 11.1% in November.
read more
Euro area economic and financial developments by institutional sector: 3rd Quarter 2015
January 28, 2016--Euro area saving grew faster than non-financial investments. Net non-financial investment remained at broadly unchanged and positive levels for corporations and for households, and remained at broadly unchanged negative levels for government.
read more
New Ossiam strategy index ETF launched on Xetra
ETF tracks performance of most liquid Japanese companies with minimal variance
January 28, 2016--A new equity index fund issued by Ossiam has been tradable in Deutsche Börse's XTF segment via Xetra and Börse Frankfurt since Thursday, 28 January.
read more
UBS Asset Management lists 52 ETFs on the Euronext Amsterdam Stock Exchange
UBS now accounts for 25% of the total number of ETF’s listed in Amsterdam
January 27, 2016--UBS Asset Management today announced that is has listed 52 ETFs on the Amsterdam Euronext Stock Exchange.
read more
New db x-trackers bond index ETF launched on Xetra
ETF provides access to US government bonds
January 27, 2016--A new db x-trackers bond index ETF from Deutsche Asset & Wealth Management has been tradable via Xetra and Börse Frankfurt since Wednesday, 27 January.
read more
Solactive launches Low Carbon Index Family -A smart way for Investor to take action on climate change
January 26, 2016--Solactive AG in collaboration with South Pole Group has launched a low-carbon equity index family.
read more
Börse Frankfurt extends bond trading hours
January 25, 2016--The Frankfurt Stock Exchange is expanding its bond trading services.
read more
Turkish lira eases with emerging markets, eyes inflation report
January 25, 2016--The Turkish lira drifted lower on Monday as investors trod cautiously ahead of Tuesda's central bank inflation report, and risk appetite waned anew as oil prices tumbled again. The lira stood at 3.0190 against the US dollar on Monday afternoon, just firmer than 3.0130 in late Friday afternoon trade, but off a high of 2.9998 overnight.
read more
CBO-The Budget and Economic Outlook: 2016 to 2026
January 25, 2016--CBO estimates that the federal budget deficit in 2016 will be $544 billion, raising debt held by the public to 76 percent of GDP. Solid short-term growth in the economy is projected to be followed by slower growth in subsequent years.
read more
Russian Economy Contracts Most Since 2009 As Oil Prices Continue To Plunge
January 25 2016--"Russia's economy, facing renewed pressure from plunges in energy prices and the ruble, contracted the most since 2009 last year on oil's decline and sanctions over the conflict in Ukraine that curbed access to international financing," Bloomberg reports.
read more
Eurozone business activity slows sharply in January
January 24, 2016--Eurozone private sector business activity slowed sharply in January against a backdrop of volatile financial markets and uncertainty about the global outlook, a key survey showed Friday.
read more
UK banks set to launch 'robo-advisers'
January 22, 2016--Barclays, RBS, Lloyds and Santander plan digital advice services
read more
IMF Working Paper-Risks of Stagnation in the Euro Area
January 22, 2016--Summary: This paper discusses the risks of stagnation over the medium term in the euro area.
read more
WisdomTree Europe sees continued growth in Equity UCITS ETF (HEDJ)
January 22, 2016--Provides unique Eurozone export-oriented exposure to the same Index as the Company's flagship U.S.-listed ETF
WisdomTree Europe Equity UCITS ETF (HEDJ) gains momentum in Europe-gathers almost $100m in AUM in just over a month growing from $77m to close to $172m
read more
New iShares equity index ETF launched on Xetra
ETF offers first-time access to Israel's capital market
January 21, 2016--A new iShares equity index ETF from BlackRock's product offering has been tradable on Xetra and Börse Frankfurt since Thursday, 21 January.
Name: iShares TA-25 Israel UCITS ETF
read more
Russian ruble keeps on falling, hits new record low
January 21, 2016--The Russian ruble has hit another historic low against the dollar as currencies slid across the former Soviet Union against the backdrop of low oil prices.
read more
Official Statistics: Forecasts for the UK economy: January 2016
January 20, 2016--A comparison of independent forecasts for the UK economy in January 2016.
read more
Saxo Bank launches the first large-scale, truly digital, investment solution for retail investors in partnership with BlackRock
January 20, 2016--Saxo Bank launches the first large-scale, truly digital, investment solution for retail investors in partnership with BlackRock SaxoSelect investment portfolios consisting of BlackRock exchange traded funds (ETFs) to launch in selected European markets, starting with Denmark, Finland, Italy, Norway, Netherlands and Sweden in Q1 2016.
read more
January 20, 2016--BlackRock's iShares has launched an ETF for European investors that invest in the national Israeli index.
read more
ESMA publishes letter from European Commission on AIFMD passport
January 19, 2016--The European Securities and Markets Authority (ESMA) has published the letter it received from the European Commission (EC) in respect of its advice on the
read more
New Amundi bond index ETF launched on Xetra
ETF focuses on euro-denominated corporate bonds with special rating
January 19, 2016--A new bond index ETF issued by Amundi has been tradable on Xetra and Börse Frankfurt since Tuesday,19 January.
Name: Amundi ETF BBB Euro Corporate Investment Grade UCITS ETF
Asset class: bond index ETF
ISIN: FR0012951044
Total expense ratio: 0.2 percent
read more
UK not strong enough for rate rise, says Carney
January 19, 2016--Bad domestic and global news put BOE governor in holding pattern
read more
ETFs/ETPs listed in Europe gathered a record 82 billion US dollars in net new assets in 2015, according to ETFGI
January 14, 2016--ETFs/ETPs listed in Europe gathered US$82.0 billion in net new assets in 2015 which is 32.5% above the prior record level of US$61.8 billion gathered in 2014.
read more
UK Global Hub for Green Finance, New UNEP Report Says
January 14, 2016--The UK is well-known as a major financial centre, but it is also a global hub in the fast-growing green finance arena, according to a new report released today by the UN Environment Programme's (UNEP) Inquiry into the Design of a Sustainable Financial system.
read more
Lombard Odier IM and ETF Securities launch a currency-hedged share class of its Global Corporate Bond Fundamental ETF
January 13, 2016--Listed a GBP hedged version
Transparent, cost-effective solution for investors
Unlike market-cap benchmarks which reward the most leveraged borrowers, a fundamental approach treats each corporate issuer on its own merit
read more
BlackRock builds sustainable product range with fixed income ETF
January 13, 2016--BlackRock has launched a sustainable bond exchange-traded fund in response to growing demand for investments that incorporate environmental, social and governance (ESG) factors.
read more
Two iShares bond index ETFs launched on Xetra
ETFs provide access to euro-denominated corporate bonds
January 12, 2016--Two new iShares bond index ETFs from BlackRock's product offering have been tradable via Xetra and Börse Frankfurt since Tuesday.
read more
Three new UBS smart beta ETFs launched on Xetra
ETFs provide access to MSCI Factor index family on US stock corporations with currency hedging
January 12, 2016--Three new smart beta ETFs issued by UBS Global Asset Management have been tradable via Xetra and Börse Frankfurt since Tuesday, 12 January.
read more
State Street UK ETF head eyes solo start-up after exit
January 12, 2016--Exchange-traded fund specialist poised to launch consultancy after leaving the $2.4 trillion manager in December
read more
FCA mulls return of commission payments
January 9, 2015--Watchdog is reviewing rules on financial advice but denies 'going soft on the banks'.
read more
New EURO iSTOXX High Dividend Low Volatility 50 Index Licensed To Invesco PowerShares To Underlie An Exchange-Traded Fund
January 8, 2016--STOXX Limited, a leading provider of innovative, tradable and global index concepts, today announced the launch of the EURO iSTOXX High Dividend Low Volatility 50 Index, which measures the top 50 stocks in the EURO STOXX Index based on high dividend yield and low volatility.
read more
Irish stocks: the craic is back
January 7, 2016--Ireland's stock market is in a sweet spot
read more
Solactive Starts Benchmark Offering-Sets the foundation for new smart beta index creation
January 7, 2016--Solactive, one of the growing player in the index space, made a strategic decision to enter the benchmark index business with the launch of benchmark families in the equity as well as the fixed income space.
read more