12 April 2017 Markets Research European Monthly ETF Market ...

Deutsche Bank Markets Research

Europe

Synthetic Equity & Index Strategy

European Monthly

ETF Market Review

Date 12 April 2017

Flows into European equity continue

Data in this report is as of 31 March 2017.

European ETP Monthly Highlights (Assets & Flows): Assets: European ETPs AUM increased by 15bn on MoM basis and ended the month at 594bn.

Flows: European domiciled ETPs registered strong inflows of +10.9bn for the third consecutive month in 2017. Equity ETFs were dominant where there were inflows of +6.6bn followed by Fixed Income ETFs and Commodity ETPs with inflows of +2.9bn and +1.3bn respectively.

Ari Rajendra Strategist +44-20-754-52282

Sebastian Mercado, CFA Strategist +1-212-250-8690

New Product Launches ? 20 new products European ETP market witnessed 20 new launches in March which includes

Leverage/Inverse, Sectors and SRI based products.

Investment Themes for the Month European equities drew +0.8bn of inflows primarily into broad composites. EM also saw +1bn of inflows. Country wise, US (+1.9bn) benefited while Australia saw outflows (-0.5bn).

The Smart Beta segment saw a modest increase (+0.2bn) where Factor ETFs activity were relatively muted. In other segments, Mid caps (+ 388mn), IT sector (primarily Robotics & Automations, +299mn) also had notable gains. Currency hedged ETFs saw +1.3bn inflows, primarily into CHF, EUR & GBP hedged products.

Corporates & Sovereigns commanded inflows in the Fixed Income segment (+2.9bn). Broad Bonds saw the highest assets growth.

Gold based ETPs (+0.6bn) contributed most to overall commodity flows (+1.3bn).

US listed ETFs with exposure to Europe registered monthly inflows of + $1.9bn.

Turnover: MoM turnover increased by 16% The total turnover activity into European ETPs increased by 16% (75.9bn)

compared to the previous month's total (65.5bn).

Distributed on: 12/04/2017 16:06:15 GMT

Deutsche Bank AG/London Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MCI (P) 083/04/2017.

0bed7b6cf11c

12 April 2017 European Monthly ETF Market Review

Table Of Contents European ETP Highlights ................................................................................ 3 New Launch Activity ...................................................................................... 3 Investment Themes for the Month ................................................................. 4 Turnover: MoM turnover activity increased by 16% ....................................... 7 Price discounts/premium to NAV Monitor ..................................................... 7 US Market: Inflows from European Exposed ETFs ......................................... 8

1. Investment Trends ........................................................ 9

Cross-Asset Class - | ETPs | Europe | ............................................................. 9

2. Market Metrics ........................................................... 10

ETF Industry Asset Evolution ....................................................................... 10 ETFs vs. Cash Equities ................................................................................. 13 ETFs vs. Unlisted Mutual Funds ................................................................... 14 European ETF Industry Replication Structure Composition .......................... 16 Industry Growth Analysis ............................................................................. 17

3. Cash Flow Analysis .................................................... 19

Regional Cash Flow Analysis ....................................................................... 19 Asset Class Cash Flow Analysis ................................................................... 19 Product Rankings ......................................................................................... 24

4. Product Review .......................................................... 26

New Products Launched in the Month ........................................................ 26 Average TERs ............................................................................................... 28

5. Provider Rankings ...................................................... 32

Global Provider Rankings ............................................................................. 32 European Provider Rankings - General ......................................................... 34 European Provider Rankings - by Asset Class .............................................. 38 European Provider Analysis by Replication Method ..................................... 41

6. Trading Perspective .................................................... 42

ETP Monthly Turnover Analysis by Asset Class, by Instrument .................... 42 Asset Class Analysis ..................................................................................... 42 Product Rankings ......................................................................................... 48

7. European ETF Exchanges ........................................... 53

8. Assets ........................................................................ 56

ETP Monthly AUM Analysis by Asset Class ................................................. 56 Asset Class Analysis ..................................................................................... 56 Product Rankings ......................................................................................... 62

9. ETF Broker rankings ................................................... 64

US ETP Broker Rankings .............................................................................. 64 European ETP Broker Rankings .................................................................... 65

Appendix A: How we define ETPs ................................. 66

Appendix B: The road from beta to alpha ...................... 68

Page 2

Deutsche Bank AG/London

12 April 2017 European Monthly ETF Market Review

European ETP Highlights

Assets: European ETPs AUM increased by 15bn on MoM basis and ended the month at 594bn. All the asset classes saw positive asset growth during last month where Equity ETFs assets rose by 3.3% followed by Fixed Income (1.5%) and Commodity ETPs (0.6%). In absolute terms, Equity ETFs had assets worth 399bn while Fixed Income ETFs and Commodity ETPs had assets worth 147bn and 46.3bn respectively. For more details please refer to Assets section.

Flows: European-domiciled ETPs registered strong inflows of +10.9bn for the third consecutive month in 2017. Equity ETFs were dominant where there were inflows of +6.6bn followed by Fixed Income ETFs and Commodity ETPs with inflows of +2.9bn and +1.3bn respectively. Compared to previous year where we had +9.8bn net flows for Q1 2016, flows have been impressive so far this year with over 10bn monthly net inflows for the 3 consecutive months totaling +32.5bn (+11.1bn, +10.5bn & +10.9bn in Jan, Feb & Mar'17 respectively). For more details please refer to Cash Flow Analysis section.

Global ETPs Highlights Global ETPs assets increased by $73bn, ending around $3.8 trillion at the end of Mar'17, 2% up from last month-end levels. Globally, ETPs registered monthly inflows of +$63bn during March. US-listed ETPs registered inflows of +$45bn. Asia-Pacific-listed ETPs continued previous month's positive trend and recorded inflows of +$6bn during last month.

Figure 1: Global ETPs Snapshot - | ETPs | Global |

Region

US Europe Asia-Pacific Global

AUM ($bn)

Mar-17 Feb-17

2784.40 635.48 351.64 3771.51

2737.57 615.17 345.54 3698.28

Cash Flow ($bn)

MoM Change

(%)

Mar-17

Feb-17

1.71% 45.32

46.77

3.30% 11.67

11.23

1.77% 5.79

7.28

1.98% 62.78

65.28

Turnover ($bn)

Market Share (%)

Mar-17 Feb-17

MoM Change

(%)

Cash

AUM

Turnover

Flows*

1678.10 1220.54

37.49% 74% 1.7%

86%

81.16

69.78

16.31% 17% 1.9%

4%

195.74 129.39

51.28% 9% 1.7%

10%

1955.00 1419.70

37.71%

1.7%

Source: Source: Deutsche Bank, Bloomberg Finance LP, Reuters.*Cash Flow Market Share corresponds to Mar-17 Monthly Cash Flow / End of Feb-17 AUM

New Launch Activity

Leverage/Inverse, Sectors and SRI based products launches Boost listed 6 new equity leverage/inverse ETFs on London Stock Exchange providing 3X leverage & 3X inverse performance of S&P 500 TR Index, EURO STOXX 50 EUR Index & NASDAQ-100 TR Index. Blackrock listed 5 new equity ETFs on Deutsche Borse, out of which 4 ETFs aims at tracking American consumer staples, Industrials, utilities & materials sectors. BlackRock also listed an equity ETF with focus on Japanese companies with products that are good for the environment and social well being.Wisdom tree listed 2 new equity ETFs including 1 ETF tracking Indian Quality companies, and 1 USD hedged ETF tracking Japanese equity market. Source and First Trust each listed 1 ETF based on Japanese financial technology focused companies & NASDAQ AlphaDEX Small Cap Core Index respectively.

Lyxor listed 3 fixed income ETFs on London Stock Exchange tracking the performance of Markit iBoxx GBP Breakeven 10-Year Inflation Index, Solactive Green Bond EUR USD IG Index & Barclays US Inflation Linked Bonds TR Hedged GBP. Amundi and Deutsche AM each listed 1 FI ETF providing exposure to

Deutsche Bank AG/London

Page 3

12 April 2017 European Monthly ETF Market Review

Barclays Global Aggregate (500Mn) Net TR Index & European high yield corporate bonds respectively. For additional information on new product launches please refer to Product Review section.

Figure 2: New Launches in March - | ETFs | Europe |

Source: Deutsche Bank, Bloomberg Finance LP, Reuters

Investment Themes for the Month

US, Europe and Global EM equities benefitted in March, Australia witnessed outflows ETFs tracking European indices (predominantly Euro Stoxx, MSCI Europe exUK, & MSCI EMU) experienced inflows of +0.8bn (+2.7bn inflows so far this year). Since Sep'16, European Equities (based on ETFs tracking traditional country and regional indices) have benefitted from positive flows (+6.3bn inflows since Sep'16). An additional interesting observation is the turn to positive flow for US listed ETFS with European exposure since Dec'16. For more details please refer to US Markets section below. In other regions, it was worth noting that both Global DM and EM exposed ETFs drew investment where they saw inflows of +877mn and +1.03bn respectively.

Figure 3: Regional/Country flows - March - | ETFs | Europe Figure 4: Monthly Flows in European Focused Equities* -

|

| ETFs | Europe |

Source: Deutsche Bank, Bloomberg Finance LP, Reuters.

Source: Deutsche Bank, Bloomberg Finance LP, Reuters.* Includes only Europe DM broad products.

Country wise, US-focused ETFs benefitted most with inflows of +1.9bn where major contribution came from two ETFs focused on MSCI USA and S&P 500

Page 4

Deutsche Bank AG/London

12 April 2017 European Monthly ETF Market Review

Indices. Germany-focused ETFs had notable monthly inflows of +177mn over the last month. Outflows from Australia-focused ETFs (-548mn ) were primarily contributed by one ETF, iShares MSCI Australia UCITS ETF (SAUS LN) (-547mn ).

Net flows into Factor ETFs relatively muted in March Net creation of +236mn was observed in the Smart Beta segment in March taking year-to-date inflows to +2.8bn. Within Smart Beta, net flows into Factor ETFs were relatively muted in March (+144mn) in comparison to the previous two months (+610mn & +373mn in Feb & Jan'17). Value factor strategies have been the largest contributor to factor products this year (+1bn YTD flows out of +1.1bn YTD flows in Factor ETFs). However, in March we saw modest outflows in this segment (-102mn). Quality (+100mn, +16%) and Momentum (+35mn, +7%) ETFs observed a notable pick-up over the last month. Similar positive trends were observed among US listed Smart Beta ETFs where major inflows went into momentum ETFs (+$522mn) . In contrast to European listings, Value and Low Vol ETFs also benefitted in US with monthly inflows of +$153mn & +$98mn respectively. An additional observation was the outflows from multi-factor ETFs (-$509mn).

Amongst other Smart Beta categories, Dividend and ESG strategies based ETFs also recorded positive inflows worth of +307mn and +143mn during last month.

Figure 5: Quarterly Flows into Factor & Low-Vol Strategies - | ETFs | Europe |

Source: Deutsche Bank, Bloomberg Finance LP, Reuters.

Robotics & Automation draw investment, Currency-hedged, and Mid Cap segments also gain Sector-wise, Information technology sector ETFs recorded monthly inflows of +298mn during last month which was primarily contributed by ETFs focused on Robotics & Automation theme. In our recent publication (Delta 1 Trinity of Trades, Anusha Pai 8th February 2017), it has been highlighted that Robotics and Automation focused ETFs has seen increased investors demand over the last two years where 4 products have been launched since the inception and total assets stood at 755mn at the end of Mar'17.

Deutsche Bank AG/London

Page 5

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download