Here’s who dominates the ETF market in Europe

25 April 2024 - 17:00

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Asset-weighted costs in the European active ETF market fell to an all-time low of 0.27 percent of assets under management as of March 2024.

Here's who dominates the ETF market in Europe

JPMorgan has secured a dominant position in Europe’s still-young market for actively managed exchange traded funds (ETFs), far outpacing its home market in the United States, where it operates the largest such vehicle.

According to Morningstar data, the bank’s wealth management division boasted a 44.2 percent market share in Europe at the end of March, well above Pimco’s 14.6 percent, and Fidelity’s, with 11.1 percent.

While the overall market size is still small at €33.8 billion spread across 87 active ETFs, it has expanded by approximately €10 billion over the past year.

In the US, where ETFs enjoy tax advantages over mutual funds, contributing to their growth, the JPMorgan Equity Premium Income ETF (JEPI) alone is almost as large as the entire European active ETF market , with assets of $33.8 billion.

In the U.S. market, where JPMAM is the second-largest player after Dimensional Fund Advisors, active ETFs held $530 billion in assets at the end of 2023, according to Morningstar, representing 8.5 percent of the broader ETF market, previously associated with low-cost passive investments.

Last month, JPMAM’s chief executive George Gatch said that globally, the firm manages $160 billion in active ETFs, a figure it aims to raise to $1 trillion within five years.

Gatch noted that in the US, mutual funds lost about $800 billion in assets last year, while ETFs gained about $800 billion, with active ETFs accounting for a fifth of all ETF inflows.

In Europe, the US house already holds five of the six active ETFs most held by fund of fund managers, an important distribution channel for such funds, according to Morningstar.

The most popular products are global or regional variations of the advanced search equity series, which seeks to "modestly" overweight stocks believed to be undervalued and underweight those believed to be overvalued, with low tracking error relative to the underlying benchmark index.

This relatively cautious approach to active management is symptomatic of the European active ETF market as a whole.

The market so far seems divided into two broad groups: on the one hand, cheap products with low tracking error often intended to provide broad, basic exposure to the market segment. On the other, more niche and expensive products, launched in the last two years, which so far attracted far fewer assets.

The market could also be boosted by cheaper fees, with asset-weighted costs in the European active ETF market falling to an all-time low of 0.27 percent of assets under management as of March 2024, compared to 0, 41 percent compared to when Morningstar began tracking this number in 2013.

Original article published on Italy 2024-04-24 07:00:00. Original title: Ecco chi domina il mercato degli ETF in Europa


# ETFs

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