EU-domiciled Exchange Traded Funds, or ETFs, are growing at twice the speed of traditional Ucits funds, demonstrating continued appetite among investors for passive and low cost investment vehicles, a deep dive by PwC Luxembourg shows.
Between 2012 and June 2023, EU-domiciled ETFs have grown at a compound annual growth rate (CAGR) of 18.2 percent, the PwC report said. That’s more than twice the growth rate of 9 percent for EU-domiciled Ucits funds during the same period.
Ireland manages to consistently extend its leading position as ETF domicile while Luxembourg, still clearly positioned as the second-largest ETF hub in Europe, is losing ground.
Blackrock, with its iShares ETF range, tops the ranking of the total number of distribution countries with 34 countries. Amundi comes second with 24 countries, while Invesco, Fidelity, Vanguard and UBS all distribute their ETFs in more than 20 countries, according to PwC.
Denmark top market
Denmark has emerged as Europe’s top target market for ETF distribution, showing the largest expansion of new registrations between June 2022 and June 2023, PwC said. Spain, Liechtenstein, Luxembourg, the Netherlands, Switzerland and the United Kingdom had more than 100 new registration each in the latest 12-month period.
PwC designated Estonia, Latvia and Lithuania as new markets, given that these had no ETFs registered in June 2022.
Per June 2023, a total of 22,955 ETFs were registered in Europe. Some 15,826 were registered in Ireland and 4,762 in Luxembourg. Jersey comes third with 1,309 ETFs, ahead of Germany, which is the domicile for 490 ETFs.
Japan, Saudi and Chile
Looking beyond Europe, PwC identified Japan, Saudi Arabia and Chile as top markets experiencing the biggest expansion in terms of new registrations. Singapore is the biggest market in Asia Pacific, with of 368 funds, 82 of which have a Luxembourg domicile. South Korea had only 23 Luxembourg-domiciled funds, none from Ireland. Australia is seen as a new market, with a single Luxembourg-domiciled ETF.
With 126 ETFs, all domiciled in Ireland, Israel is the second market in the Middle East after Saudi Arabia. The Chile market sees clear competition between Irish and Luxembourg-domiciled ETFs, with 56 having a Luxembourg label and 48 an Irish one, on a total of 120 ETFs.
Majority has two listings or more
In terms of listings, PwC found that a little more than one out of three ETFs, 36.5 percent, have one single listing on a European stock exchange. Some 37.6 percent of ETFs have two or three listings, while a quarter, or 24.6 percent, have four to five listings. A mere 1.3 percent of funds have six or more listings.
With 131 ETFs totalling 245.3 billion euro in assets, the S&P 500 Total Return index is the most popular index tracked by European-domiciled ETFs, ahead of the MSCI World TR USD index, which is tracked by 147 ETFs that have 180.4 billion in assets. The Stoxx Europe 50 TR Eur index comes third with 57.1 billion euro in 81 ETFS.
The index top 10 is completed by the MSCI Emerging Markets TR USD, S&P GSCI Precious Metals TR, Markit iBoxx Euro Corporates, Euro Stoxx 50 TR EUR. FTSE 100 TR, Topix TR and FTSE US Government Bond TR US indices.
Evolution in ETFs:
