The European market in Exchange Traded Funds (ETFs) has grown rapidly in the last year. Or so says a study by Euronext, which is vying with the London Stock Exchange and Deutsche Borse for leadership in this nascent market. ETFs, which track indices such as the FTSE 100 and the EuroStoxx 50, are now well-established in the United States. The first European tracker was launched as recently as 2000, but 71 trackers are already trading on five exchanges and cover 62 indices with a combined market capitalisation of Euro 6,1 billion. The average combined daily turnover of Euro 192.4 million in Europe – which reflects an average daily volume of 5.6 million shares – falls far short of the US daily turnover figure of Euros 6.4 billion in ETFs.
But Euronext, the European exchange group, has today published a research document analysing the rapid
development of NextTrack, the ETF market it launched a month ago. It sports 50 trackers with a combined market capitalisation of Euro 4.4 billion covering 43 of the leading geographical and sector indices. Average daily turnover increased to Euro 89 million in December 2001, representing 46 percent of the European tracker market.
The US experience suggests the European ETF market will grow rapidly. Euronext says that in less than 10 years the tracker has established itself in the United States as a useful and increasingly popular investment tool for index tracking. ” 2001 was a turning point in this respect, ” says the Gallic exchange, ” with strong growth seen on the different European trading platforms for trackers in terms of number of listings, turnover and market capitalisation. “
Euronext is now looking at ways to develop the ETF market both in terms of attracting greater liquidity as well as launching new products. Since the beginning of 2002, Credit Lyonnais Asset Management has launched new trackers based on the S&P Euro and S&P Europe 350 indices. Euronext will also open NextTrack Brussels with the launch, in the near future, of a tracker on the Bel 20 by Lyxor AM – pending CBF approval. Commenting on the success of NextTrack Jean-Franois Thodore, Chairman of Euronext, said:
“It is a just over a year since Euronext launched its NextTrack tracker segment. In the face of strong competition in the European market, Euronext has demonstrated its innovative strengths and ability to build a highly effective tracker marketplace. By December 2001, Euronext had become the leading European market in terms of product offer, with 50 listed trackers; market capitalisation, with a total of Euro 4.4 billion; and trading, with 46% of daily turnover in December. Euronext is well placed to build on this position in the future.”