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
Deutsche Börse to encourage hidden trades
November 29, 2015--Deutsche Börse is to follow in the footsteps of the London Stock Exchange Group by encouraging investors to trade large blocks of shares hidden from public view without breaching new rules on controversial "dark pools".
read more
Four new ComStage ETFs launched on Xetra
ETFs track the indices DAX, MDAX, DivDAX and EURO STOXX 50
November 27, 2015--Four new equity index funds issued by Commerz Funds Solutions S.A., a Commerzbank Group fund management company, have been tradable on Xetra and Börse Frankfurt since Friday.
read more
Annual Growth Survey 2016: Strengthening the recovery and fostering convergence
November 26, 2015--Annual Growth Survey starts the 2016 European Semester
Today's package launches the annual cycle of economic governance. It sets out general economic and social priorities for the EU and gives Member States policy guidance for the following year.
read more
The EU's economic governance explained
November 26, 2015--An explanation of the EU's economic governance
The economic and financial crisis revealed weaknesses in the EU's economic governance. The EU responded by taking a wide range of measures to strengthen its governance and to facilitate a return to sustainable economic growth, job creation, financial stability and sound public finances.
read more
IMF Staff Concludes Visit to Russian Federation
November 23, 2015--An International Monetary Fund (IMF) mission visited Moscow during November 16-20, 2015, to discuss the economic outlook and related policies. At the conclusion of the visit, Ernesto Ramirez Rigo, IMF mission chief for Russia, issued the following statement:
read more
Fund manager fee cap could control costs
November 23, 2015--Competition does not keep charges down in the pensions industry.
read more
Bond issuance in euros hits six-year high
November 23, 2015--Investment grade companies scramble to sell debt ahead of any ECB QE2
read more
Legal & General and Source form exchange traded fund alliance
November 22, 2015--Legal & General Investment Management and Source have formed a new alliance as the UK asset managers attempt to combat competition in Europe's fast-growing exchange traded fund market.
read more
ESMA will not exempt the collateralisation of bank guarantees for energy derivatives under EMIR
November 19, 2015--The European Securities and Markets Authority (ESMA) has decided not to further extend the existing grace period of three years for the non-financial firms' use of non-collateralised bank guarantees to cover transactions in energy derivatives cleared by European central counterpar-ties (CCPs).
read more
Official Statistics: Forecasts for the UK economy: November 2015
November 18, 2015--Forecasts for the UK economy is a monthly comparison of independent forecasts.
read more
FCA to scrutinise competition in £6.8 trillion asset management industry
The City watchdog wants to make sure investors aren't being ripped off through high costs and conflicts of interest
November 18, 2015--The UK financial watchdog has said it "may intervene" in the asset management industry if a new report finds there is not enough competition in the sector
read more
Exchanges and interdealer brokers reshape
November 17, 2015--In recent weeks the sector has experienced a wave of asset swaps and consolidation.
read more
China Europe International Exchange launched in Frankfurt
November 17, 2015--A Sino-German joint venture named China Europe International Exchange (CEINEX) was launched here on Wednesday, kicking off the trading of Renminbi-denominated exchange traded funds (ETFs).
read more
Amundi MSCI Europe Buyback UCITS ETF Launched on Xetra
Focus on European companies with stock buyback programmes
November 17, 2015--A new equity index exchange-traded fund (ETF), issued by Amundi, is open for trading on Xetra and the Börse Frankfurt venue.
Name: Amundi MSCI Europe Buyback UCITS ETF
Asset class: equity index ETF
read more
World's first Indian fixed income ETF launched on Xetra
November 17, 2015--Deutsche Börse welcomes ZyFin as new ETF issuer
November 17, 2015--The world's first Indian fixed income ETF has been listed on Xetra and the Börse Frankfurt venue on Tuesday.
read more
MiFID: ESMA makes available pan--EU data on suspensions and removals from trading
November 17, 2015--The European Securities and Markets Authority (ESMA) has launched today a new database which makes available information on suspensions and removals from trading including restoration details that national supervisory authorities have to notify under the Markets in Financial Instruments Directive (MiFID).
read more
Pressure mounts on fund managers to disclose hidden fees
November 16, 2015--New draft European rules are piling pressure on fund managers to come clean about hidden fees that can reduce dramatically the value of individuals' retirement pots.
read more
Banks race to revamp research units ahead of new European rules
Mifid 2 to reshape way analysts report on companies and how research can be priced and circulated
November 16, 2015--Banks are facing a pressing deadline to get their sprawling research divisions in order after decades of deliberations and experimentation.
read more
New Deka bond index ETF launched on Xetra
ETF tracks European government bonds with highest 5-year yield
November 16, 2015--A new bond index ETF issued by Deka Investment GmbH was launched and available for trading on Xetra and Börse Frankfurt since Monday, 16th.
read more
IMF-Emerging Europe Sees Stronger Growth Ahead, but Faces New Risks
November 13, 2015--Much of the region growing at a healthy pace; CIS economies face challenges
Growth expected to turn positive next year, but new risks have emerged
Countries face fiscal challenges; growth-friendly budgets needed
read more
GDP up by 0.3% in the euro area and by 0.4% in the EU28
November 13, 2015--Seasonally adjusted GDP rose by 0.3% in the euro area (EA19) and by 0.4% in the EU28 during the third quarter of 2015, compared with the previous quarter,according to flash estimates published by Eurostat, the statistical office of the European Union.
read more
BMO launches European ETF range
November 7, 2015--BMO Global Asset Management has launched a range of European-listed exchange traded funds
read more
Lyxor's flagship synthetic exchange traded fund becomes physical
November 7, 2015--The future of "synthetic" exchange traded funds that use futures to follow an index was dealt another blow last week after Lyxor, the French asset manager, dropped the synthetic structure for one of its biggest funds.
read more
Unscheduled free float adjustment in SDAX
Changes to be effective as of 11 November
November 6, 2015--Deutsche Börse AG has announced an unscheduled adjustment to the free float of alstria office REIT AG in SDAX.
read more
Consultation paper on indirect clearing under EMIR and MiFIR
November 5, 2015--ESMA has published the Consultation paper on indirect clearing under EMIR and MiFIR.
read more
European Commission-Autumn 2015 Economic Forecast: Moderate recovery despite challenges
November 5, 2015--The economic recovery in the euro area and the European Union as a whole is now in its third year. It should continue at a modest pace next year despite more challenging conditions in the global economy.
read more
Four WisdomTree equity index ETFs launched on Xetra
ETFs track German, European and Japanese companies with weighting factor dividends
November 5, 2015-Four new exchange-listed index funds issued by WisdomTree have been tradable on Xetra and Börse Frankfurt since Thursday. The stock corporations in the reference indices are weighted according to dividend amount, with those paying a higher dividend weighted heavier.
read more
Positive market reception for recently launched Euro-BONO- and Mini-DAX-Futures
November 4, 2015--The two Eurex Exchange futures contracts newly listed last week have already generated considerable trading volume in their first week of trading.
read more
UK official holdings of international reserves: October 2015
November 4, 2015--This monthly release shows details of movements in the UK's official holdings of international reserves, or assets. These consist of gold, foreign currency assets and International Monetary Fund assets.
read more
Turnover at Deutsche Borse's cash markets at 126.7 billion euros in October
November 2, 2015--November 2, 2015--Order book turnover on Xetra, Börse Frankfurt and Tradegate Exchange across all asset classes stood at €126.7 billion in October (October 2014: €141.2 billion).
read more
New Source equity index ETF launched on Xetra
ETF offers access to US S&P 500 companies
November 2, 2015--A new equity index fund from the ETF offering issued by Source has been available on Xetra and the Börse Frankfurt venue since Monday. The ETF tracks the performance of the S&P 500 Index using a selection of companies comprised in it.
read more
IFAs call for more ETFs to be made available on investment platforms
November 2, 2015-- New research from Source, one of the largest providers of Exchange Traded Products (ETPs) in Europe, reveals that 82% of IFAs believe ETFs need to be more widely available on the investment platforms they use.
read more