ETFs continue to make headway in the European market and now account for almost 16% of AUM

The ETF management survey conducted by Quantalys Harvest Group in partnership with BNP Paribas Asset Management provides a European overview of the ETF market and highlights key trends.

In 2023, ETFs recorded a strong increase, in relative terms, from 6% of all funds under management in Europe ten years ago to almost 16% by the end of 2023, confirming investors' growing interest in the asset class.

In terms of capital inflows and returns recorded, 2023 was a very favourable year with more than €141 billion, making it the second best year after 2021.

European Investors and ETFs

• The number of investors interested in ETFs, an asset class historically popular with institutional clients, is growing. 2023 was one of the best years in terms of inflows, showing an increase in the variety of profiles among investors who are integrating ETFs into their portfolios: private banking, wealth management services, financial advisors and retail investors via digital platforms.
• Thematic ETFs are increasingly attractive. More than a trend, this structural shift highlights a fundamental movement in asset allocation management, which is no longer limited to a breakdown by asset class, region or sector, but is moving towards a cross-thematic approach. In 2023, climate-related thematic funds raised EUR 3 billion, while renewable energy funds, which were very popular in 2021, received EUR 1 billion.
• Investor interest in fixed income continues to grow, with fixed income ETFs now accounting for 25% of ETF assets under management in Europe. 2023 marked a record year for inflows into the asset class.
• Assets of ESG ETFs increased by 28% during the year. However, after peaking in 2021, interest in ESG seems to have waned. Even so, BNP Paribas Asset Management continues to see growing demand for ESG-focused ETF strategies.
• ETFs are an essential component of asset allocation in the wealth management segment and are used in all areas, including life insurance. The number of life insurance policies containing at least one ETF has increased by more than 4% in one year and 10% in two years to 48% by 2023.

The trend recorded in 2023 continues in 2024, with positive capital inflows into the asset class during the first quarter of the year.

2023 was a year of development for the index market. This development was largely due to the wealth management industry, which has set out to offer accessible and innovative products to profiles such as savers, who are already familiar with and interested in this type of product. Digitalisation, increasing demands in terms of transparency of investment products, costs and performance have also favoured ETFs. It was therefore essential for Quantalys Harvest Group, as an independent research company, to carry out a second edition of the ETF observatory in collaboration with BNP Paribas Asset Management.

Pierre Miramont, Head of Fund Analysis and Portfolio Modelling, Quantalys Harvest Group.

This study confirms the success of ETFs, which continue to grow in the European market. In Spain, BNP Paribas Asset Management will continue to offer ETFs with a sustainable approach to meet the demand of our clients, who have an increasingly diverse profile. For the second consecutive year, Quantalys Harvest Group's ETF Management Observatory, in partnership with BNP Paribas Asset Management, analyses existing trends to understand the evolution of the asset class, which is a key element of our strategic plan for 2025.

Sol Hurtado de Mendoza, Managing Director of BNP Paribas Asset Management for Spain and Portugal