DWS, Vanguard and JP Morgan Asset Management were among the standout performers in 2023 amid another bumper year for ETF flows in Europe.
According to data from ETFbook, European exchange-traded products (ETPs) captured $158bn inflows, the second-highest on record, as overall assets under management (AUM) hit $1.8trn, helped by market-driven gains of 16.8%.
In particular, it was a record year for fixed income ETFs as investors piled into developed market government bonds and investment-grade credit amid a spike in yields and fears of a recession in the US.
Fixed income ETFs captured $70bn inflows throughout the year, topping of the previous record set in 2019.
“The key theme of the year was that higher quality bonds saw the highest demand,” Gary Buxton, head of EMEA ETFs at Invesco, said.
“With yields hitting their highest levels for over a decade, there was less need for investors to take on additional credit risk by moving down the rating spectrum, particularly given concerns about the economic outlook and geopolitical tensions.”
BlackRock and DWS were the main beneficiaries of this shift in demand for the asset class, capturing 55% and 16% of fixed income ETF flows, respectively.
Overall, it was a comeback year for DWS which saw $22.5bn net new assets in 2023, up from $3.8bn outflows the previous year.
The Xtrackers S&P 500 Equal Weight UCITS ETF (XDEW) was a particular standout product with inflows of $2bn over the year amid concerns of overconcentration risk in the flagship US index.
DWS remains third in the overall rankings with $188bn AUM, behind Amundi which currently has $229bn AUM following $12.1bn inflows in 2023.
Demand for plain vanilla low-cost ETFs drove $20bn net new assets into Vanguard’s 34-strong UCITS ETF range.
The US giant, which is now the fourth-largest ETF issuer in Europe, crossed the $100bn AUM milestone for the first time this year amid skyrocketing retail ETF adoption, especially in Germany.
Chart 1: Top 10 ETF issuer inflows in Europe
ETF issuer | 2023 flows ($,bn) | AUM ($,bn) | Market share (%) |
|---|---|---|---|
BlackRock | 71 | 798 | 43.7 |
DWS | 22.5 | 188 | 10.3 |
Vanguard | 20 | 122 | 6.7 |
Amund | 12.1 | 229 | 12.6 |
JPMAM | 7 | 19.9 | 1.8 |
SSGA | 7 | 71.1 | 3.9 |
HSBC AM | 4.9 | 32.5 | 1.8 |
Invesco | 4.9 | 81.4 | 4.5 |
BNPP AM | 4.1 | 26.2 | 1.4 |
LGIM | 2.7 | 17.2 | 0.9 |
Source: ETFbook
Active ETF demand
Elsewhere, JP Morgan Asset Management (JPMAM) saw the fifth-highest inflows across all ETF issuers last year, its highest position in the rankings on record, amid ballooning demand for active ETFs.
According to a recent ETF Stream survey of professional investors, in partnership with JPMAM, 40% of respondents plan to increase their allocations to active ETFs while a further 30% use active ETFs and will maintain their positions.
The US giant, which captured 77.7% of flows in active ETFs, saw $7bn net new assets in 2023, a 4.4% market share of overall flows and well ahead of its 1.1% share of AUM.
Furthermore, Fidelity’s focus on active ETFs was a key driver behind its strong year after the firm posted $1.3bn inflows over the 12 months.
Which giants shined?
Overall, it was another strong year for BlackRock which saw $71bn inflows in 2023, taking its overall AUM to $798bn, a 43.7% market share.
The world’s largest asset manager, which was named ETF Issuer Of The Year 2023 at ETF Stream’s awards, helped drive innovation in fixed income with the launch of fixed maturity bond ETFs.
State Street Global Advisors (SSGA), Invesco and HSBC Asset Management all had strong years, with inflows of $7bn, $4.9bn and $4.9bn respectively.
“We envision a more supportive environment for all asset classes in 2024, as interest rates peak and central banks pivot to more dovish stances”, Buxton forecasted.
“As such, we would expect strong demand to continue in the months ahead.”
Underperformers
At the other end of the spectrum, PIMCO suffered the most outflows across all ETF issuers despite the strong demand for fixed income throughout the year.
The US giant saw $780m net redemptions, closely followed by UBS Asset Management which suffered $715m outflows.
Waning demand for commodity ETPs meant it was also a tough year for WisdomTree which saw $580m outflows over the 12 months.
