Europe’s exchange traded product market has seen a sharp fall in launches and a dramatic rise in closures this year, despite the supportive backdrop from firmer financial markets, in a sign that it may be reaching saturation.
“Probably the market is getting saturated. There are only a certain number of funds you need. The driver over the last few years has primarily been sustainable funds but we have seen a damping of interest in these funds,” Lamont added. Michael O’Riordan, founding partner of consultancy Blackwater Search and Advisory, said he was “unsurprised” by the slowdown in European launches.
In addition, Glow said that gloom over the prevailing economic and market backdrop was holding fund managers back. Much of the divergence is likely to stem from taxes: ETFs receive favourable capital tax treatment vis-à-vis mutual funds in the US. In Europe there is no differential treatment, blunting the rationale for active ETFs.Another factor influencing the European market is Amundi’s acquisition of fellow French house Lyxor in 2021 — 42 of the European ETPs that closed this year were managed by either Amundi or Lyxor.