Institutional adoption of exchange traded funds by asset owners such as pension funds and insurance companies has accelerated in Europe since 2020, according to BlackRock’s analysis of its own iShares ETF ownership. There has been a compound annual growth rate of 29 per cent since 2020 in the value of iShares held by the largest European institutions, said Kirst Kuipers, head of institutional iShares sales Emea and head of official institutions sales Europe.
Kuipers calculated that over the past three months a trade of $50mn on the iShares Core € Corp Bond Ucits ETF , which quotes a total expense ratio of 20 basis points, would have cost 3bp vs 27bp for trading the underlying securities. Even greater cost savings could have been achieved on a similar sized trade for the iShares € High Yield Corp Bond Ucits ETF , which quotes a TER of 50bp, where it would have cost 5bp to trade the ETF vs 60bp for the underlying.