2021 proved to be a very decent year for European ETFs, topping off the year with net inflows of $195.3bn and Amundi has finally completed the acquisition of Lyxor and the FT compares certain ETFs to Jurassic Park.

Fund Launches and Updates

EUROPE

Invesco has launched an Islamic developed market ETF, its first tracking stocks that are compliant with Shariah investment rules. The Invesco Dow Jones Islamic Global Developed Markets UCITS ETF (IGDA) is listed on the LSE and the SIX Swiss Exchange with a TER of 0.40%. Link

VanEck is planning to drop the Vectors branding across its European ETF portfolio in a bid to streamline its product marketing. Subject to shareholder approval, the change would see the removal of the Vectors brand across 17 of its European ETFs.

It added the ticker for each ETF would remain unchanged. Link

Flows

A recap: 2021 proved to be a very decent year for European ETF flows, topping off the year with net inflows of $195.3bn.

In total, equity inflows accounted for 72% of the inflows and Fixed income accounting for 22%. Cryptocurrency launches hit the headlines and raked-in an impressive $1.7b of inflows.

However, the year belonged to ESG products where it seemed that every new product launch had an ESG tilt to it and gathered $87bn by year end. Additionally, last year’s hot area of Thematics, was a distant second in 2021 gathering $15.5bn.

In commodity world, Gold ETFs were hit by net outflows of $9bn last year marking the biggest annual withdrawal from gold ETFs since 2013.

Analysts are now warning that the bullion market faces more significant headwinds with increases in interest rates in response to inflationary pressures and a stronger dollar expected to weigh on the price of the yellow metal this year.

Assets worth $209bn are held in ETFs backed by physical gold. Link

Noteworthy

Amundi has completed the acquisition of Lyxor from Société Générale creating the second largest ETF business in Europe.

The €825m acquisition, which was originally announced in April 2021, will see the combined ETF business control over €170bn assets under management across more than 300 products, a 14% share of the European market.

Europe’s largest asset manager is targeting a 50% AUM growth by 2025 from its wider passive platform which currently has €282bn AUM. Link

Just one in four active fund managers that invest in large US-listed companies beat Wall Street’s S&P 500 in 2021, as stockpickers again struggled to match the returns delivered by cheap index trackers following the US equity market.

The blue-chip, broad-based S&P index delivered a return including dividends of 28.7 per cent last year. Just one per cent of active growth managers outperformed the S&P, according to Bank of America.

Withdrawals from actively managed US domestic equity funds reached $392.7bn in 2021, according to preliminary data from the Investment Company Institute. Link

Last week there was an FT article by Robin Wigglesworth referencing Jurassic Park to certain ETFs .

In Steven Spielberg’s original Jurassic Park, the chaos theorist played by Jeff Goldblum chastises the theme park folly in resurrecting dinosaurs by noting: “Your scientists were so preoccupied with whether or not they could, they didn’t stop to think if they should.”

And in Robin’s opinion the exchange traded fund industry should take note, specifically in regards to leverage/inverse and volatility ETFs. Link

Additional reads

Research shows US index trackers lose out on nearly $4bn a year due to price moves created by front-running. Link

O’Shares ETFs Announces Strategic Growth Deal with SS&C ALPS Advisors. Link

Nearly $1.2 billion was pulled from the $18 billion iShares 20+ Year Treasury Bond exchange-traded fund (ticker TLT) — the third-biggest outflow since its 2002 launch. Link

Charles Schwab has reduced the fees for five bond ETFs from five basis points to four, according to a recent regulatory filing. Link

Crypto brought in $9.3 Billion in 2021. Link