Exchange-Traded Funds

Europe Races into ETF Fast Lane

  • Why it matters

    Why it matters

    The ETF market continues to grow faster in the United States than in Europe, but there are signs that this trend could be reversed in coming years.

  • Facts

    Facts

    • At the moment, 109 ETFs each manage more than €1 billion ($1.1 billion) in Europe. They have a combined market share of 58 percent.
    • The Blackrock subsidiary iShares has the largest market share in both the United States (39.6 percent) and Europe (47.5 percent).
    • Last year €355 billion flowed into index funds worldwide — €215 billion into the United States and €72 billion into Europe.
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    Audio

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Europe's ETFs are pushing hard for new business. Source: Getty Images.

Exchange-traded index funds, or ETFs, are marketable securities that track an index, commodities, bonds or a group of assets. They can be traded like common stock on an exchange and are considered especially transparent.

So it was all the more surprising when the investment company Eaton Vance brought a new ETF to the U.S. market early this year — one that runs counter to the claim of transparency made by traditional index funds.

In contrast to other ETFs, the new fund doesn’t declare each day what securities are in its portfolio, but only each month. ETF providers are now even considering publishing the composition of their funds once per quarter.

Whoever wants to know the direction in which the European ETF market is developing needs only to take a look at the United States, because what happens there is often imitated in Europe.

In a certain sense, the U.S. market for ETFs is the precursor of this investment category. The first index funds were set up there in the 1970s, but it wasn’t until the turn of the millennium that they made their way to Europe.

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