Active ETFs domiciled in Europe are likely to hit $1trn in assets under management (AUM) by 2030, driven by the “transparency and timeliness of trading that ETFs provide,” according to Nick Cherney, head of innovation at Janus Henderson.
Active ETFs counted for over half of European ETFs launched in October, though they still capture just 2.3% of European ETF assets, according to data from ETFBook.
Within this asset class – systematic ‘index-plus’ active strategies remain the most popular in Europe – with key characteristics tied to being benchmark aware and systematic.
Similarities to well-established smart beta ETFs have prompted the questions surrounding where these products fit within their portfolio construction.
Double ESG launches
This week, Amundi unveiled a four strong range of smart beta ETFs capturing value, momentum, minimum volatility and low size.
The value, momentum, minimum volatility ETFs employ similar ESG metrics, including reducing carbon equivalent exposure by 30% and improving their ESG score compared to their respective parent indices.
The role of smart beta has been thrown into question following the rise of active ETFs in Europe, alongside ESG products falling out of favour this year amid regulatory confusion, product complexity and greenwashing concerns.
Meanwhile DWS expanded its range of ESG ETFs with the launch of a green real estate ETF.
‘Level’ playing field for retail investors needed
Europe’s ETF industry – when compared to the efficient US market – imposes extra costs on retail investors, according to Vanguard.
Vanguard has said efficiency could be improved by raising transparency standards for ETF dealing, which could be aided by the introduction of a consolidated tape, pooling market data from trading platforms to provide investors with “up to date” transaction data.
The asset manager also pushed for greater harmonisation of the national rules and varying protocols adopted by the multiple European exchanges that trade ETFs as well as more simplifications to clearing and settlement processes.
