Europe set to be key battleground for index providers
The evolution of the European ETF market has lagged behind its US counterpart as retail investors have been slow to follow institutional investors into the asset class. But shifting market dynamics mean index providers are now jostling to take advantage, writes David Wigan
Growth in the US exchange-traded fund (ETF) market has focused increasingly away from indexes weighted by market capitalisation towards solutions variously known as smart, alternative, strategic beta or factor investing. The shift reflects investors' demand for higher returns amid persistently low volatility and meagre interest rates, and this search for yield meant that smart beta strategies saw 29% of US equity ETF inflows in 2013, according to Cogent Research, against 19% of industry assets.
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