On the 15th anniversary of European ETFs, BlackRock predicts US$1 trillion milestone is less than five years away

Europe entered the year 2000 nervously, with fears the Y2K bug would damage systems dependent on global technology……..

But having sailed through this test it became a fertile year for innovation of many kinds, including in the European financial markets where the first exchange traded funds (ETFs) were launched.

The first ETFs to list in Europe were two European equity ETFs on Deutsche Börse on 11 April 2000: the iShares STOXX Europe 50 UCITS ETF and iShares EURO STOXX 50 UCITS ETF. This was quickly followed by the first ETF to list on the UK’s London Stock Exchange on 28 April 2000, the iShares Core FTSE 100 UCITS ETF.

There are now 2,269 different exchange traded products in Europe, listed in 22 countries across the continent by 45 different providers. The industry holds US$494 billion in assets and the original UK ETF, iShares Core FTSE 100 UCITS ETF, has grown to become the largest UK equities ETF with £3.7bn in assets under management.

On the eve of the industry’s 15th anniversary, BlackRock’s Rachel Lord, Head of EMEA iShares, commented:

“ETFs are one of the success stories of twenty-first century investing in Europe. In just 15 years, this financial market has grown from scratch into an industry on the cusp of US$500 billion, by providing levels of efficiency, transparency and value-for-money that have democratised investing for those across the continent.

“ETFs domiciled in Europe continue to grow rapidly, despite recent economic and geopolitical uncertainties. In fact, the growth in uptake of ETFs here is far higher than the global average, and Europe is a major contributor to the shape and size of the global market. European ETFs will surpass US$500 billion any day now, and by 2019 when the industry emerges from its teenage years, we expect them to be greater than US$1 trillion within a global market of US$6 trillion.

“There have been many developments over this time, especially from funds tracking niche and alternative markets like commodities and real estate. Alongside ongoing innovation in areas such as smart beta, we believe investors will continue to turn to ETFs when choosing their core equity and bond market-weighted investments.

“We see growth coming from investors who have previously deployed capital using products traded over-the-counter – bonds and futures especially – who are turning to ETFs for the first time because of the liquidity and low costs. There is a clear trajectory ahead, and we’re welcoming new European investors to ETFs every day.”


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