The return of equity investors to the European exchange-traded product (ETP) market at a rate above that seen in the first quarter is a sign of market optimism, according to Deutsche Bank.
The bank's report, using figures up to 3 December, shows European-domiciled equity ETP cash flows in the fourth quarter have already outstripped those registered in the first quarter of the year.
It shows equity is by far Europe's largest asset class and has a significant effect on overall growth figures.
However, equity products saw net flows dip to around €2bn in the second quarter of this year, although they have since rallied to attract inflows of around €4.8bn and €6.4bn so far in the third and fourth quarters.
Emerging markets have attracted consistent and growing inflows, drawing €1.5bn, €1.6bn, €2.2bn and €2.7bn respectively across the four quarters of the year.
Developed market equity meanwhile has seen more volatile waters, with European major equity benchmarked ETFs losing €1bn in flows in the second quarter of this year and developed non-European ETFs seeing outflows in the third quarter of €3m.
Both sub-segments have picked up though, with European ETFs and non-European ETFs netting €1.9bn and €1bn respectively in the fourth quarter to 3 December.
Following a busy week of 11 product launches, the European ETP market is expected to register the highest yearly growth rate of any major global region.
Deutsche Bank's market year end preview, which does not include exchange-traded notes, puts the US and Asia on ETP growth of 24.0% and 24.1% respectively, while Europe sits at 31.3% as of 3 December.
At €223bn though, absolute assets in European ETPs remain a fraction of their American counterparts at over €730bn.
Since overtaking the American market in April 2009, the European market does retain its global dominance in terms of number of products. Having begun the year with 994 ETPs compared to 836 in the US, this gap has widened to 1,352 European domiciled products against 972 US.
This translates to a growth rate of 36% in Europe and just 16.3% in America. Meanwhile, Asia has 292 products as at 3 December.
With global ETP asset growth at 23.7%, ETCs have had a particularly good year, registering growth of 34.5% so far. With nearly €100bn assets globally, roughly a fifth comes from Europe, which has seen ETC assets and product numbers grow by nearly 60%.
Commodities are the best performing major ETP asset class this year with AUM growth of nearly 66%. Gold, which together with other precious metal products make up nearly three quarters of commodity assets, continued its revival by drawing flows of €116m, once again the most attractive commodity in a week that otherwise saw subdued flows of €76m across the asset class.
Fixed income ETP flows have fallen off in the second half of this year and particularly in this fourth quarter. This is largely due to declining inflows into sovereign-benchmarked products, which have failed to come close to attracting the €3bn inflows of the second quarter ever since. Money market products have lost over €1.2bn this year, knocking nearly a quarter off their assets under management.
Overall though, fixed income products have grown assets 19.2% year-to-date. Sovereign products meanwhile revived in the week ending 3 December, attracting €408m after the previous week's loss of €119m.
Deutsche Bank claims that lacklustre sovereign flows are as much to do with improving equity market conditions as euro sovereign solvency concerns.
As the year comes to a close on strong and renewed flows into equity ETFs, the bank's figures show that close to two thirds of asset growth in the European ETF market has come from new flows.
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