The exchange-traded product market in the US and Europe is expected to hit $1.2trn in assets under management in 2010, says Deutsche Bank.
The bank's inaugural ETP research shows European assets will grow to near €200bn, experiencing an increase of 20-25%.
In the US, assets are set to surpass the $900bn mark, rising between 15-20%, although if bullish equity markets continue, AUM could reach $1trn in the US and €210bn in Europe.
The research reveals European asset growth rates will continue to surpass the US, despite the latter market remaining substantially larger in absolute size and growth.
It also says European market fragmentation will benefit the ETP flows in the region this year. Although Europe is considered a single market, there are many structural barriers which will likely bolster flows for cross-listed products.
In the UK, Germany, France and Italy, improving ETP uptake rates will continue to rise as major financial institutions further promote these products.
Deutsche also expects fixed income to remain strong in the US, while commodity inflows will continue in this region as well as Europe. Fixed income assets grew 83% in the US compared with 17% in Europe.
The bank says alternative products, such as those targeting hedge fund returns, will continue to see strong growth in Europe. In 2009, European assets primarily focused on hedge fund like returns increased to €684m.
The research shows db x-trackers, ETF Securities and Credit Suisse grew market share by €26.3bn, €10.9bn and €6.8bn respectively, while BlackRock and Lyxor lost 1.8% and 6.4% of market share.
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