Investors have access to Exchange-Traded Funds (ETFs) that utilize sophisticated betting strategies.
In the dynamic world of exchange-traded funds (ETFs), Amundi and iShares (BlackRock) have emerged as the dominant players in Europe's smart beta ETF market.
Amundi, recognized as the leading European headquartered ETF provider, boasts a broad smart beta offering, particularly in ESG and climate products. The company's acquisition of Lyxor has further boosted its market share, holding a 12% share for strategy ETFs in Europe.
iShares, on the other hand, dominates in terms of net inflows and assets under management (AUM) for both popular ETFs and smart beta strategies. The iShares Core S&P 500 UCITS ETF was the largest European-listed ETF by net inflows in 2024.
Vanguard also holds a substantial market share, with large ETFs such as the Vanguard FTSE Europe ETF. New entrants like Columbia Threadneedle, Schroders, and Dimensional Fund Advisors are also making their mark, which could influence smart beta ETF offerings going forward.
The European ETF market is evolving, with growth driven by product innovation, including smart beta and active ETFs. The market is seeing increasing investor adoption across major countries such as Italy, Germany, and France.
Risk-minimizing strategies follow with 17% of the assets in the European market for strategy ETFs. Morningstar includes dividend ETFs in the smart beta category, and at SPDR, products that fall under substance, low market risk, and dividends are included in smart beta ETFs.
Value ETFs are close behind at 7%, while only 7% of assets are in products that bundle under the factor of quality. Dividend ETFs make up 38% of the assets in the European market for strategy ETFs. Multifactor approaches, which bundle several strategies, come in third with over 11%.
Factor ETFs use strategies to outperform standard indices or reduce portfolio volatility. One example is the MSCI World strategy index, which broke less severely in March than its standard counterpart.
In the European market, iShares is the dominant provider with a 45% market share for strategy ETFs. State Street and UBS each hold a 10% and 7% market share, respectively. The definition of smart beta at SPDR's ETF division is anything that doesn't target traditional market capitalization weightings, a definition many other providers in the market have also adopted.
Investors with money in factor ETFs experienced relative calm during the past spring, providing a testament to the resilience of these products. Assets in strategy ETFs in the European market, including smart beta ETFs, totaled $9.5 billion in the analyzed year. With new entrants and growing investor interest, the smart beta ETF market in Europe is poised for continued growth.
Other players in the European smart beta ETF market include Vanguard, Columbia Threadneedle, Schroders, and Dimensional Fund Advisors, all of whom are increasing their market presence and potentially influencing smart beta ETF offerings. Personal-finance investors might consider dividend ETFs, as they make up 38% of the assets in the European market for strategy ETFs.
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