Tuesday, January 18

Europe concentrates the launch of new ETFs

The international managers they have moved the battlefield for passive management to Europe for various reasons. On the one hand, the assets in this type of vehicle reached € 1.3 trillion at the end of September, according to data from Morningstar, which shows the great appetite that the European investor has for these products.

But, in addition, the market share can expand since the markets of ETFs represent 10 percent of the global investment fund market, while in the United States it is 50 percent. Furthermore, the fact that across the Atlantic the trend towards passive management continues apace bodes well for the future potential of the European market.

The third argument in favor of indexed management comes from the hand of profitability. The average return of the 19 categories of active management has been 1.7 percent per year, compared to 4.2 percent of the indexed management funds marketed in Spain, according to a study on returns of active management funds and passive.

“With an average volume of 208,000 million euros, if these had been invested in indexed management during these 15 years they would have generated some 178,000 million euros of benefits, compared to the 58,300 million euros that have been generated on average with active management , a difference of more than 120,000 million euros that investors have stopped earning “highlights Carlota Corral, manager of Indexa Capital and co-author of the study.

Inflows in European ETFs are concentrated in equities

But where is the money going inside ETFs? According to Amundi, the Equity ETFs registered in Europe raised 92.3 billion euros in the first nine months of the year.

The 6-month trends continued, and global indices remained the most popular, with entries of 44,400 million euros, while the North American indices were the second most popular, with 25,700 million euros.

The shift from traditional equity indices to those that are lean towards environmental, social and governance characteristics (ESG) continued, and these products totaled 44.1 billion euros in the first nine months of the year.

WisdomTree bets on a commodity ETF

Fruit of this interest, the managers have turned to launching exchange-traded funds with a European passport.

WisdomTree is betting on a commodity ETF to take advantage of investor interest in assets that protect against inflation. It is the WisdomTree Broad Commodities UCITS ETF, which is listed on the London Stock Exchange and also on the Xetra.

Nitesh Shah, Head of Commodity and Macroeconomic Analysis at WisdomTree Europe, explains that “the inflation in the United States and Europe is the highest in a decade and it is mainly driven by shocks on the supply side, where raw materials are uniquely positioned to protect portfolios ”.

The strong rises in the price of energyDrought-induced food price increases and transportation bottlenecks, for example, directly impact raw material prices and consumer baskets on which inflation figures are calculated.

Not only are these the phenomena that are driving commodity prices in the short term. An infrastructure renaissance combined with the energy transition could fuel a super cycle in certain raw materials over the next decade.

Global X, leader in thematic ETFs also in Europe

For its part, Global X has continued to invest in Europe since it debuted on the continent at the beginning of the year with the launch of a range of thematic exchange-traded funds.

In this way, adds to its current thematic offering of five UCITS ETFs in seven additional thematic products, and the first product focused on raw materials of the firm in Europe.

“Through thematic investment, Spanish investors can obtain specific exposure to certain disruptive themes such as internet of things (IoT), robotics and artificial intelligence (AI), e-commerce and 5G, and we expect to see large investments and advances in these trends over the next decade, “he adds. Rob Oliver, Head of Business Development Europe, in relation to the themes of the new ETFs.

As for COPX, “the copper is useful for a wide range of applications, such as construction, industrial machinery, transportation, electricity generation and electronics. 2021 has proven to be a transformative year for copper, and we have a strong long-term outlook for copper demand driven by trends poised to impact the global economy, “he said Morgane Delledonne, Director of Analysis for Europe.