BlackRock (NYSE: BLK), the world’s largest asset manager, believes the European exchange traded fund market is stagnating without enough competition to promote growth.
“One player [BlackRock] cannot build the entire ETF market in Europe alone,” Mark Wiedman, global head of iShares at BlackRock, said in a Financial Times article.
BlackRock’s iShares ETFs make up almost half of the assets held in European-listed ETFs, up from under a third at the end of 2010. According to BlackRock, Europe-listed iShares ETFs held $194.2 billion in assets under management in October while Europe ETF assets totaled $413 billion. Globally, iShares has $900.4 billion in assets, compared to the ETF industry’s total assets of $2.23 trillion.
However, net inflows into Europe-listed ETFs faltered in the year ended October, reaching just $12.4 billion, compared to inflows of $25.3 billion for the same period year-over-year, according to ETFGI.
State Street Global Advisors and Vanguard are also gaining traction in the European ETF market. State Street has attracted $3.1 billion in Europe-listed ETFs this year, up 63.2%.
Jim Ross, global head of ETFs at SSgA, stated that State Street is actively trying to “find new friends” in a “concentrated effort” to increase awareness of the company’s products among financial advisors.
In just over a year since listing ETFs on European markets, Vanguard has attracted $2.5 billion in inflows. Nick Blake, head of UK retail at Vanguard, attributes the growth to the company’s low-cost mantra appealing to advisors.
The slow uptake among European retail investors also has regulators worried. Steven Maijoor, chairman of the European Securities and Markets Authority, pointed to the disparate investing habits between Europe and the U.S., where retail investors make up a large portion of the ETF market.
“We are interested to understand better why retail exposure to ETFs [in Europe]appears to be relatively low,” Maijoor said in the article.
Wiedman, though, suggests that a shift to a fee-based model for financial advisors could help stimulate interest in ETFs.
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Max Chen contributed to this article.