However, the research also showed the growth rate for ETFs slowed considerably over the period. From December to June, the growth rate for the European ETF industry was just 1.95%. Lipper said the low growth was caused by overall market sentiment and high comparative levels of assets under management.
The research also showed the European ETF industry remains concentrated in a small number of flagship funds: Only 41 of the 1,743 ETFs hold assets above €1bn. The majority of these (28) are equity funds, with the largest fund in the universe the iShares DAX ETF, which holds over 5% of the overall ETF assets under management in Europe. There are also 11 bond and two physical gold ETFs. The ten largest ETFs account for around a quarter of the market.
The overall number of ETFs shrank over the period, with 38 new fund launches in the first six months of the year, but 56 fund closures. Some industry commentators have taken this as a sign of consolidation in the industry, but Detlef Glow, head of Lipper EMEA, said: "This means the industry has matured and there are not so many “white spots” left where fund promoters can place new products… from my point of view it is only a sign of a mature industry, where promoters need to clear out their product ranges before they launch new ETFs. Therefore, I expect the number of available ETFs will increase by the end of 2013."
Glow added: "After the takeover of Credit Suisse ETF by iShares it seems to be pretty clear that the overall ETF landscape in Europe will change over time. There might be further takeovers or other events that will put established promoters out of business, while on the other hand new ETF promoters such as First Trust will enter the market. The further clearing of product ranges, where unprofitable products are taken off the market, and the ongoing launch activities of promoters will change the product ranges, with a trend toward more granularity."
Luxembourg and Ireland remain the dominant domiciles for European ETFs, followed by France. Physical replication continues to be preferred to synthetic replication.