28 March 2023 | by Kianusch Cacace
What’s the most popular ETF in Europe? How much should you be paying for an ETF? Why is that mysterious UCITS tag really important? Level-up your knowledge with our ETF factoid blitz.
- Level: For beginners
- Reading time: 3 minutes
1. The ETF market is huge
Over eight trillion dollars are invested in ETFs worldwide. That’s more than the GDP of Germany and France combined. The US leads the way while Europe and Asia-Pacific battle it out for second place:
| Regions | Equity ETF market size | Fixed income market size |
|---|---|---|
| Europe | $0.9T | $0.3T |
| US | $5T | $1.2T |
| Asia-Pacific | $0.8T | $0.1T |
Assets under management (AUM) in trillions of US dollars. Source: iShares, Dec 2022.
justETF note: Fixed income includes bonds and money market ETFs.
2. ETFs are dwarfed by the total investment market
ETFs are big business but they’re still a small (if growing) slice of the overall investment market:
| Regions | ETF share of total equity market | ETF share of total fixed income market |
|---|---|---|
| Europe | 7.5% | 1.6% |
| US | 12.6% | 2.5% |
| Asia-Pacific | 3.9% | 0.3% |
Source: iShares, Dec 2022.
These figures also show that claims that passive funds have grown so big they’re in danger of distorting the market are way off the mark.
3. Billions of dollars are traded in ETFs every day
$176.9 billion is traded in equity ETFs each day on average. Another $32 billion changes hands in fixed income ETFs. A grand total of $53.8 trillion in ETFs was bought and sold across 2022.
The scale of that trading activity helps explain why the best ETFs are so liquid and why we pay so little in bid-offer spreads.
Trading is measured as Average Daily Volume (ADV). Source: iShares, Dec 2022.
4. Europe’s most popular ETF asset classes
Growth potential helps explain why Europeans hold almost three times more wealth in equities than bonds. Commodities and money market ETF investments are miniscule in comparison:
| Asset class | Market share |
|---|---|
| Equities | 71.2% |
| Bonds | 24.5% |
| Commodities | 2.6% |
| Money Market | 1% |
| Alternatives | 0.5% |
| Other | 0.3% |
AUM. Source: Refinitiv Lipper, Dec 2022.
5. Top 5 most popular ETF equity categories in Europe
- US equity: €262.6 bn
- Global equity: €179 bn
- European equity: €61.9 bn
- Emerging markets equity: €56.9 bn
- Eurozone equity: €44.6 bn
AUM. Source: Refinitiv Lipper, Dec 2022.
After more than a decade of domination by US stocks, it’s not surprising that Europeans have more capital invested across the Atlantic than in the rest of the world. Can America keep it up or will the mean reversion phenomenon swing the advantage back towards global ETFs?
justETF note: Japan and the UK were in a photo finish for sixth and seventh place. Japan just edged it.
6. Top 10 most popular ETFs in Europe (by AUM)
- iShares Core MSCI World UCITS ETF USD (Acc)
- iShares Core MSCI EM IMI UCITS ETF USD (Acc)
- iShares Core FTSE 100 UCITS ETF GBP (Dist)
- iShares Core € Corp Bond UCITS ETF EUR (D)
- Vanguard FTSE All-World UCITS ETF USD (Dis)
- Xtrackers MSCI World UCITS ETF (1C)
AUM. Source: Refinitiv Lipper, Dec 2022.
Do you hold any of these? Europe’s ten largest ETFs account for 15.25% of the market between them.
7. Top 10 largest ETF providers in Europe
| ETF provider | € bn | Total ETFs / ETCs |
|---|---|---|
| iShares (BlackRock) | 576 | 384 |
| Amundi | 194 | 393 |
| Xtrackers (DWS) | 132 | 214 |
| Vanguard | 80 | 34 |
| UBS | 78 | 413 |
| Invesco | 60 | 137 |
| SPDR (State Street) | 54 | 105 |
| BNP Paribas | 26 | 108 |
| WisdomTree | 22 | 182 |
| HSBC | 17 | 51 |
AUM. Source: Bloomberg Intelligence, Dec 2022.
8. ETF fees continue to fall
The average ongoing fee for an ETF is now a mere 0.23%. You are doing well if your ETFs are even cheaper than that!
Yet actively managed equity funds are more than five times as expensive. Their average fees weigh in at a bloated 1.28% per year.
AUM. Source: Bloomberg Intelligence, Dec 2022.
9. That boring UCITS label is actually useful
The UCITS tag you see everywhere isn’t just designed to make ETF names even longer! It’s actually a seal of quality. Like the regulations ensuring your car doesn’t explode in a Hollywood-style fireball, UCITS ensures compliant European ETFs meet important safety standards such as:
- Being adequately diversified.
- Your assets are properly ring-fenced. So they remain yours in the unlikely scenario that a fund provider goes bankrupt.
- The ETF remains liquid and can be sold even if markets are disrupted.
Like most EU directives, UCITS is dull but we’re glad it’s there.
10. ETFs celebrate their 33rd birthday in 2023
The prototype for all contemporary ETFs launched in Canada on 9 March 1990 as the Toronto 35 Index Participation Units (also known as TIPs). TIPs still exists today as the iShares S&P/TSX 60 Index ETF.
But as with many origin stories, it took another product to truly popularise TIPs innovative new approach. SPY (aka the SPDR S&P 500 ETF Trust) was the 1993 hit that put ETFs on the map. It’s still the world’s largest ETF today.
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