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European ETF Industry Evolution: 2 Crises Survived and 10 Years of Exponential Growth

ETFs have seen strong growth and, in Europe, total assets now exceed $1.5 trillion. In this paper we look at the trends across asset classes from the past 10 years and what the industry could see going forward. 

ETF Strategist

Introduction

While ETFs have been available in Europe since 2000, it is only in the 10 years following the Global Financial Crisis that we have seen a boom in ETF asset growth.

Over this period, ETFs in Europe have seen a compounded annual growth rate (CAGR) of more than 16%. Starting 2010 with just $228 billion of assets, ETFs entered the new decade with more than $1 trillion in total assets.

As of September 2021, ETFs have reached even loftier heights, buoyed by massive inflows and surging markets following the dip triggered by the COVID crisis. European ETF assets now stand at just over $1.5 trillion, adding half a trillion in the last year alone.

ETF AUM by Asset Class (USD Billions)

etf-industry-evolution

So what have been the main products driving this phenomenal growth in the industry? For most of the decade, equity products drove the majority of flows, first through broad market beta products then later on also through smart beta and sector products. However, for the past few years, fixed income ETF asset growth has started to accelerate. In 2019, these products saw $60 billion of new assets — more than double the previous record set in 2017.

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