The European and American exchange traded fund (ETF) markets are both world leaders. Europe leads in sheer number of products offered, while the United States takes the cake in total assets. But the two markets could not be more different.
If you’re just comparing numbers, Europe and the United States appear to have two very large ETF industries. Europe has less than one-third of the $820 billion in assets gathered in the States, but a lot more funds, a total of 1,259, compared with 981 in the U.S. as of March 31, says Oliver Ludwig for Index Universe. [ETF Numbers March Into Madness.]
Looking deeper, though, and stark differences begin to appear.
- European financial institutions often launch their own products through their own distribution networks, leading to lots of smaller, similar products rather than one gigantic fund. [Why Institutional Investors Dig ETFs.]
- Each fund is listed on a variety of exchanges – as many as eight – making it conceivable that one ETF could be listed 55 times. [Our March ETF Performance Report.]
- Since they’re using their own distribution networks, many of the banks in Europe are not motivated to compete on pricing. In the United States, providers and brokers are locked in a price war that has consumers rejoicing.
- Most of the ETF investing in Europe is done by large institutions rather than retail or individual clients. That further lessens the incentive to compete on price. [Why ETF Inflows Are on a Hot Streak.]
For more stories about global ETFs, visit our global ETF category.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.