Inflows amounted to $82bn (€75bn) over the year, an increase of 32.5% compared to 2014. December was the best month for index trackers, with net inflows of $9bn. European equities were by far the most popular category, as more than half of all net inflows into index-tracking products went to ETFs tracking European equity indices.
In 2013 and 2014, US equities were the most popular asset class for passive investors. However, US equities fell heavily out of favour with European fund buyers in 2015. Though active funds were most affected, inflows into US equities also decreased.
Move to smart beta
Deborah Fuhr, Managing Partner of ETFGI, attributed the strong asset growth to investors using ETFs/ETPs in more ways. “Retail is using more ETFs through Robo-advisors, institutions are using ETFs as alternatives to futures, and financial advisors are using more ETFs especially in multi-asset portfolios,” she said.
While the bulk of ETF inflows is in market cap-weighted ETFs which aim to capture market beta, Fuhr expects a move towards smart beta ETFs in 2016 as overall return prospects for equities have deteriorated. “Therefore smart beta ETFs are the main growth area going forward,” she says.