The fight for second place in Germany’s premier soccer league, the Bundesliga, is often more interesting to watching than the leader – if only because Bayern Munich, currently the top team, is usually too far ahead to catch. It’s a similar story with the European market for index-tracking, exchange-traded funds – ETFs for short. BlackRock, the world’s largest ETF manager, has streaked well ahead of its rivals. Currently, the most exciting tussle is for second place, where recent turmoil at home stands to bump Deutsche Bank down the rankings.
The European ETF market is still in its infancy, having been founded only at the start of the millennium. After many boom years (and incredibly, despite the financial crisis of 2008-09), its capitalization in Europe has swollen to an impressive €572 billion ($643 billion). Their drawing power? People warm to investment vehicles that are transparent, liquid and cheap, and ETFs fit the bill. The instruments offer easy access to roughly any asset class, geographic region, sector or strategy, and usually offer lower fees (and better tax incentives) than, say, mutual funds. BlackRock, the world’s largest asset manager, has cornered almost half of this highly concentrated market.