Industry Updates

ETF Wrap: DWS will not go quietly

The power struggle in European ETFs, product delistings and new thematic entrants made headlines this week

Jamie Gordon

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The tussle for number two spot in European ETFs is alive and well as German asset manager DWS said it plans to usurp Amundi by 2025, less than a year after the French giant completed the industry’s largest acquisition in more than a decade.

In January, Amundi wrapped up the €825m deal for Lyxor to leapfrog DWS with a 14% share of the European ETF market and €170bn assets under management (AUM).

Last summer, Amundi and Lyxor had at least four ETFs tracking 14 distinct indices, meaning consolidating its product range has been a priority for the now merged entity. In the last two months alone, it has merged five strategies, instantly reducing fees on four Lyxor ETFs as they benefit from new-found scale.

Setting ambitious targets back in 2021, Amundi said it would aim to grow the AUM of its passive business 50% by 2025.

Not deterred by the momentum gained by its rival, DWS under recently appointed CEO Stefan Hoops said this week it hopes continued growth in its passive products will help it overtake Amundi and become Europe’s second-largest issuer by 2025.

“DWS aims to grow its Xtrackers and passive business globally as the company expects ongoing strong growth of passive products, which can be highly profitable given sufficient scale. In Europe, DWS wants to regain its number two position for ETPs,” the firm said in its Strategic Ambition and Financial Targets 2025.

At the end of November, Amundi exchange-traded products (ETPs) housed €199bn versus €136bn for DWS, according to data from Bloomberg Intelligence.

While a considerable gap, Amundi’s ETP range currently spans 394 products, 12 more than BlackRock and a considerable 183 more than DWS. Under new leadership and scope to expand its ETP range over the coming years, it appears Europe’s issuer rankings may still be some way off reaching a status quo.

A reckoning for fun funds?

With thematic ETFs booking some of their worst quarterly flows in three years and crypto assets either losing two thirds of their value or collapsing entirely, 2022 has been a harsh reality check for the feel-good launches that have come to market in the post-pandemic era.

Just in recent weeks, two crypto exchange-traded note (ETN) issuers pulled products from the European market, with Bitpanda announcing it would close its range to focus on its core business given “the realities of the market”. Just days later, Eqonex announced it will have to delist its bitcoin ETN after winding down its custody arm as part of a broader liquidation.

Outside of crypto, thematic issuers have also begun trimming the excess off their product line-ups. For instance, Europe’s first white-label ETF issuer, HANetf, announced it will shut the iClima Smart Energy UCITS ETF (DGEN) in January after amassing just $4m AUM in its first 18 months.

DGEN’s closure becomes the second by HANetf in recent months after it shut the $700,000 Cleaner Living ESG-S UCITS ETF (DTOX) in September.

After a couple of years of rapid product roll-out across crypto ETNs and thematic ETFs, high inflation and looming recession mean demand has been limited for more exotic exposures, with many providers paying thousands of pounds a month to keep the lights on in products housing less than five million dollars – in some cases less than a million.

However, these challenges have not put off some providers from continuing to extend their ranges. In the last two months, Hashdex and Vinter both launched crypto-basket ETNs. Also, just this week, ETF Stream revealed VanEck launched Europe’s first bionic healthcare ETF while BlackRock debuted its metaverse thematic candidate. 

ETF Wrap is a weekly round-up of the top stories on ETF Stream

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