ETF issuers in Europe take more targeted distribution approach

Trends show issuers are focusing their distribution on individual markets rather than Europe-wide

Theo Andrew

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ETF issuers are taking a more targeted approach when registering their products in Europe by choosing to follow markets where demand is hot instead of adopting a region-wide distribution strategy, Robert Glover, global fund distribution partner at PwC Luxembourg, said.

It comes as Denmark was ranked as the top market for ETF distribution in the 12 months to the end of June, registering 256 ETFs, according to PwC’s latest European ETF Listing and Distribution report.

However, 216 of these were from just two ETF issuers – 138 from Amundi and 78 from WisdomTree – highlighting the targeted approach issuers are taking to markets. The issuers also took the same approach in Finland and Spain where they account for almost all the 205 and 206 registrations, respectively.

Speaking toETF Stream, Glover said: “Long gone are the days when asset managers come to Europe for the first time, establish a product in Ireland or Luxembourg and register across 15-20 different countries.

“It is now a case of looking at it on a slightly more of a piecemeal basis, registering in three or four countries and building it up from there. ETF issuers are saying, ‘we will absolutely go for it in these particular markets because we know that there is going to be investor demand’.”

The trend is even more apparent for new and smaller entrants to the market.

For example, when AXA Investment Managers made its entry into the European ETF marketearlier this monthit listed the AXA IM ACT Biodiversity Equity UCITS ETF (ABIU) in Germany only.

The French asset manager said it would assess market demand before broadening out its distribution into other jurisdictions.

Glover added this is also a growing trend outside of Europe. “Last year we saw a big push by BlackRock and Vanguard in Israel, which is a very open and developing market in the ETF space.

“This year, we are seeing it in Saudi Arabia where there have been 70 registrations, 70-80% of which were from BlackRock alone.”

Another explanation could be the demand for different asset classes in different markets. For example, ETF issuers might target Italy and the UK for short and leveraged products while registering more ESG-related ETFs in the Nordics.

According to the report, the number of ETFs on the London Stock Exchange grew by 19% in the 12 months to the end of June, the largest growth across Europe. However, much of these will have been in the form of short and leveraged ETPslaunchedin large batches.

“You have some markets that see a big launch of products and issuers want the unity from listing in one place,” Glover added.

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