The announcement of an Amundi-Lyxor merger in April was greeted by talk of intensified competition at top end of the European ETF market – an idea now given credence with the combined French entity and DWS finishing H1 with almost identical inflows. 

Though the deal will not be finalised until the end of the year, the combined company was expected to claim 13.6% of the European ETF market, leapfrogging its German rival and its 11.2% stake. 

Not to be outdone, DWS saw 9.7bn ETF inflows in H1 taking its overall assets under management (AUM) to €137bn, marginally outdoing Amundi and Lyxor’s combined take of €9.2bn, according to data from Morningstar.

However, assuming assimilation of the French firms’ product line-ups go to plan, the new Amundi is expected to see a boost from deeper liquidity among other benefits.

Todd Rosenbluth, head of ETF & mutual fund research at CFRA, said: “There are significant scales advantages in the ETF market and the Amundi-Lyxor partnership will help them to improve distribution and potentially bring pricing down to entice more investors.”

The question now is whether any of the chatter around potential DWS merger candidates holds true – and whether the firm opts for the acquisition or distribution route to try and recapture its spot as Europe’s second-largest issuer.

“We also expect more consolidation to occur as the European market is poised for continued growth in the coming years as investors become more comfortable trading ETFs,” Rosenbluth added.

Elsewhere, BlackRock unsurprisingly topped the charts by some distance in H1 with €36.6bn inflows while State Street Global Advisors (SSGA) and Vanguard also had strong halves with €6.1bn and €6bn inflows, respectively.

At the other end of the spectrum, BNP Paribas Asset Management was bottom of the pile with €519m ETF outflows while investors pulled some €365m assets from WisdomTree’s ETF range in Europe.

In-demand ETFs 

So far in 2021, DWS inflows have been supported by the popularity of the Xtrackers S&P 500 Equal Weight UCITS ETF (XDEW), which has collected more than €2.6bn since the turn of the year, according to data from ETFLogic.

Though some way behind, the French issuers’ top hit has been the Lyxor MSCI World Financials UCITS ETF (FINW), which has gathered an impressive €1.5bn. 

These flows are in keeping with broader trends seen in H1, where equity ETFs claimed 80% of all new assets and US large-cap and value factor exposures were kings.  

In the meantime, broad basket commodity and energy sector equity funds have enjoyed the recovery trade, while fixed income investors favoured inflation-linked bond ETFs over vanilla iterations of developed market sovereign debt. 

Finally, having started off the year with strong flows, thematic ETF popularity diminished in the second quarter, even as nine new strategies launched in the product class.

Speaking on thematics’ eventful first half, Kenneth Lamont, senior analyst, manager research, passive strategies, at Morningstar, commented: “Following record breaking flows in Q1, net inflows into European thematic ETFs dropped to a still respectable 1.9bn in Q2. This net new money helped push thematic ETF assets up to a record high of 32.4bn. 

“The iShares Global Clean Energy UCITS ETF (INRG) was again the biggest recipient of flows, collecting 595m in the period. Launched in Q1 2021, the L&G Hydrogen Economy UCITS ETF (HTWO) was also a winner, netting 187m over the quarter.”

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