Industry Updates

ETF Wrap: Europe tipped to boom

ETF market projections, T+1 settlement anxieties and a new India ETF made headlines this week

Lauren Gibbons

This week saw a series of reports detailing the increasingly bright future for the European ETF market.

According to EY research, the fund structure is set to hit $4.5trn by 2030 in Europe, aided by new providers entering the market and the increasing uptake of ETFs from retail investors.

Elsewhere, a new report by Blackwater found 92% plan to venture into ETFs or enhance their due diligence efforts, rising from just 9% in 2021.

Closing out the glowing projections was a report from PwC, noting that the shift of wealth from boomers to millennials is tipped to reach $68bn globally by 2030, tipped to drive the European ETF market to $3trn by June 2028.

ETFs risk breaching rules under T+1

ETFs in Europe continue to brace for challenges as the US transitions to a T+1 settlement cycle this May.

This shift has led to concerns ETFs could breach UCITS rules around cash holdings and overdraft restrictions, with Europe remaining on a T+2 cycle.

Despite the anticipated complexities for the market, Antonette Kleiser, ETF specialist at Brown Brothers Harriman said the industry remains optimistic.

“Over the last year in excess of 50% of ETF orders may be settling a T+1 basis,” she said.

HSBC enters Indian tech sector

HSBC Asset Management expanded its thematic range with the launch of an India tech ETF.

Revenues for the Indian tech sector continue to skyrocket, surpassing $200bn in 2022, a 15.8% increase on the previous year, and is expected to top $500bn by 2030, according to a NASSCOM report.

Olga de Tapia, global head of ETF and indexing sales at HSBC AM, said: “India is fast becoming a hot bed of new world technology sectors offering exciting investment opportunities.”

The ETF joins white label issuer HANetf’s INQQ India Internet & Ecommerce ESG-S UCITS ETF (INQP), which also has a focus on Indian tech equities.

ETF Wrap is a weekly digest of the top stories on ETF Stream

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