The rise of ETFs in Europe: Net positive influx of €141 billion in 2023

Rick Steves

“This breakthrough is as much due to the wealth management industry, which has set itself up to offer accessible and innovative products, as it is to savers who are now familiar and seduced by these products.”

The Quantalys Harvest Group, in collaboration with BNP Paribas Asset Management (BNPP AM), has released a comprehensive survey on the European ETF (Exchange Traded Funds) market.

Revealing a marked increase in the popularity and management of ETFs in Europe, the report shows that, as of the end of 2023, ETFs constituted 16% of all open-ended fund Assets Under Management (AUM), a significant leap from 6% a decade ago.

2023 emerged as a robust year for ETF inflows, with a net positive influx of €141 billion, marking it as the second-best year following 2021, as per the report, which identified the diverse group of interested parties: private banks, family offices, financial advisors, and retail investors, showcasing a broadening appeal of ETFs beyond their traditional institutional investor base.

ESG ETFs up by 28%

A notable trend in the ETF market is the increasing allure of thematic ETFs, particularly those focused on climate and renewable energies. Climate-related thematic funds saw a collection of €3 billion in 2024, indicating a strategic shift towards cross-functional thematic asset allocation. Fixed income ETFs also saw heightened interest, now representing 25% of ETF-managed assets in Europe, with 2023 being a record year for inflows into this asset class.

ESG (Environmental, Social, and Governance) ETFs experienced a 28% increase in assets over the year, despite a slowdown since the peak interest in 2021. However, BNPP AM notes a continued demand for ESG-focused ETF strategies. Additionally, ETFs are increasingly incorporated into wealth management, notably in life insurance policies, with 48% of such policies including at least one ETF in 2023, up from 38% two years prior.

The trend of positive ETF inflows continues into the first quarter of 2024, buoyed by the AMF’s recent approval for the listing of active ETFs on the Euronext French stock exchange.

Lorraine Sereyjol-Garros, Global Head of ETF & Index Business Development at BNP Paribas Asset Management, said: “This study confirms the success of ETFs, which continue to grow in the European market. At BNPP AM, we will continue to offer ETFs with a sustainable approach to meet the demand of our increasingly diverse client base. For the second year in a row, the Quantalys x BNP Paribas Asset Management ETF Observatory is analyzing trends to understand the evolution of this asset class, which represents a key element of our 2025 strategic plan.”

Pierre Miramont, Head of Fund Analysis and Model Portfolios at Quantalys Harvest Group, commented: “2023 was a year of development for the index market. This breakthrough is as much due to the wealth management industry, which has set itself up to offer accessible and innovative products, as it is to savers who are now familiar and seduced by these products. Digitalization and increasing demands in terms of transparency of investment products, costs, and performance have also favored ETFs. It was therefore essential as an independent analysis firm for Quantalys Harvest Group to carry out a second edition of the ETF observatory in partnership with BNP Paribas Asset Management.”

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