Good inflows, many new products, successful new ideas (iBonds) and a first "celebrity" ETF (Gerd Kommer) - after a difficult year in 2022, the ETF industry continued its triumphal march in 2023.
19 December 2023. FRANKFURT (Börse Frankfurt). It was another good year for the ETF industry - and also for ETF trading on Xetra. After the global ETF market suffered last year from the weak performance of equities and bonds, this year is set to reach a new high with a global investment volume of USD 10.32 trillion in ETFs, according to the British consultancy ETFGI.
There were also a number of records and near-records in the ETF segment of the German stock exchanges. The assets under management of all ETFs traded on Xetra climbed to 1.2 trillion euros, an all-time high. The number of ETF issuers on Xetra also rose to new heights, currently at 32. abrdn, KraneShares and CASE Invest are new to the list. In addition, 240 ETFs were newly admitted on Xetra by the end of November - this makes it the second-best year in terms of new listings since 2000, when the first products were launched on Deutsche Börse in Frankfurt. In total, 2,125 ETFs were listed at the end of November, compared to 2,002 at the end of 2022.
ETF trading was characterized by the very good performance of equities until the summer, the subsequent slump and the sharp rise from November onwards. "Due to the large market movements, much of the focus was on the major indices such as the S&P 500 and MSCI World," reports Frank Mohr from Société Générale. The traders at Lang & Schwarz also reported steady demand for MSCI World and S&P 500 trackers over the course of the year. In addition, the technology sector was an almost constant topic, as Jan Duisberg from ICF Bank notes. However, he also recalls the banking crisis in March with the insolvency of smaller US banks and the large Credit Suisse - with correspondingly high turnover in banking ETFs.
Mohr
The fact that equity ETFs on the major indices remain the favorites is also shown by the statistics of the Munich-based trading and analysis company Crossflow for the European ETF market in 2023: A total of 74 billion euros net had flowed into equity ETFs by the end of November. Global equities accounted for 42 billion euros of this, North American equities for 23 billion euros, while eurozone ETFs were sold below the line. The most popular country by far was the USA, followed by India and Switzerland. The "flop" countries were China, Germany and Japan. Bond ETFs were also very popular: Crossflow reported inflows of 57 billion euros by the end of November. The most popular category here: US government bonds, followed by European government bonds and European corporate bonds with good credit ratings. Also in demand: Money market ETFs, especially European ones.
More ESG, more bond ETFs ...
One development from previous years continued in 2023: the trend towards sustainable ETFs. Of the approximately 240 new ETFs on Xetra, 156 are classified as ESG. These now account for over 40 percent of all ETFs on Xetra. They account for around 25 percent of assets under management and over 20 percent of trading turnover.
The fact that 85 new bond ETFs were launched on the market was also a record. Particularly noticeable in trading: the comeback of money market and money market-related ETFs. "For a long time, no one was interested in money market ETFs, but with the sharp rise in interest rates, things suddenly changed," says Mohr. Favorites were the Xtrackers II EUR Overnight Rate Swap (LU0290358497), which is even among the top ten on the Xetra turnover list (until November). However, ETF traders also repeatedly reported good demand for the Lyxor Euro Overnight Return (FR0010510800) and the iShares EUR Ultrashort Bond (IE00BCRY6557).
... and then the iBonds and the Gerd Kommer ETF
There was also something completely new in the bond segment: iBonds from iShares, the first ETFs with a fixed maturity date. "That was a real innovation, it filled a gap," says Mohr. iShares launched it on the market in August, and Xtrackers presented the first competing products in November. A total of 19 ETFs with maturities between 2025 and 2033 are now available on Xetra.
Another new development was that Gerd Kommer - often referred to as the "ETF pope" - was the first celebrity to launch an ETF on the market. The L&G Gerd Kommer Multifactor Equity, which is available in accumulating and distributing versions (IE0001UQQ933, IE000FPWSL69), tracks shares of companies from all over the world and of different sizes. Both market capitalization and economic performance (GDP) are taken into account in the country weighting. Factor premiums (factor investing) are also overweighted. The ETF has already raised around 100 million euros.
The most traded ETPs (ETFs, ETCs and ETNs) on Xetra until November were equity ETFs from iShares on the major indices, specifically MSCI World (IE00B4L5Y983), Euro Stoxx 50 (DE0005933956), DAX (DE0005933931) and Stoxx Europe 600 (DE0002635307). In fifth place is the ETC Xetra-Gold (DE000A0S9GB0), followed by the iShares ETF on the S&P 500 (IE00B5BMR087) and the first sector ETF, the iShares Euro Stoxx Banks 30-15 (DE0006289309). Still in 9th place: the money market ETF Xtrackers II EUR Overnight Rate Swap (LU0290358497).
Active ETFs as a game changer?
Another trend: more and more active ETFs. There are now 116 active ETFs on offer on Xetra, 32 of which have only been available since this year. The largest providers are Fidelity and JP Morgan, but PIMCO, Franklin Templeton, Ossiam, VanEck and First Trust also have corresponding offerings. Active ETFs are still a niche market. However, it is showing strong growth rates - also in terms of assets under management and trading turnover. The analyst firm Scope already took a close look at the segment in September: "ETFs definitely have the potential to be a game changer in the active/passive debate," it said. However, a longer performance history was still missing. "Once a corresponding track record of at least three, preferably five years is available, active ETFs could become very interesting in future, particularly for institutional clients and private self-directed investors."
Costs fell once again, especially for core products that cover important standard markets. A major step was the announcement by State Street Global Advisors in November that it would significantly reduce the costs of S&P 500 ETFs in Europe, for example from 9 to 3 basis points for the classic S&P 500 tracker. However, there are also some ETFs that are still surprisingly expensive, as Ali Masarwah from the fund platform envestor.de notes - especially those that have been around for many years.
By Anna-Maria Borse, 19 December 2023 © Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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