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NEWSLETTER | 9 Jun 2023

Appetite for thematic ETFs predicted to grow

A new study from Cerulli Associates finds that while thematic products have been one of the fastest-growing segments of the asset management industry in Europe over the past five years, last year saw something of a setback in the sector for both active and passive thematic funds.

The firm reports that by the end of last year, the AUM of active and passive thematic funds domiciled in Europe had decreased 23.7 per cent year on year, falling from EUR409.4 billion in 2021 to EUR312.3 billion.

However, Cerulli Associates’ study finds that managers are more positive when it comes to thematic index funds: 39 per cent expect fast growth in assets over the next 12 to 24 months, and 21 per cent expect thematic ETFs to experience such growth. Only 5 per cent believe there will be no asset growth across active and passive thematic funds.

Right place, right time funds do enjoy enormous growth. Our interview this week is with Stephanie Pierce, Chief Executive Officer of ETF, Index, and Cash Investment Strategies for BNY Mellon Investment Management. The firm is enjoying the fruits of its labours, celebrating the three-year anniversary of BNY Mellon Investment Management’s launch of ETFs with quarter one growth of 172 per cent, making it the fastest growing ETF issuer in US equity ETFs and in the top 40 issuers overall.

The firm’s ETF range now has USD3.77 billion in assets in 17 products, and Pierce says: "What’s happened is that interestingly on a trailing three year basis back from the end of April, the fastest growing categories were those that we have zero fees on, the BNY Mellon US Large Cap Core Equity ETF and BNY Mellon Core Bond ETF, so we have been in the right place at the right time."

Another right place, right time for the ETF industry is Korea, where another study from Cerulli Associates revealed that the overall trend in retail subscriptions to mutual funds in Korea is shifting gradually toward ETFs, as exchange-traded offerings have become more tailored and customised to retail needs.

One of the factors supporting this AUM increase was a relaxation of ETF regulations, which led to diverse product innovations that were timely in meeting retail and institutional demands, Cerulli writes.

I will be speaking and chairing a number of ETF sessions at Informa’s Impower Fund Forum in Monte Carlo 27th and 28th June, 2023 – including one on thematic ETFs.

The agenda is here, and I am very pleased to be able to offer my readers a 10 per cent discount on tickets, using this link or this discount code FKN3253EMSPK.

Beverly Chandler, Managing Editor

For live updates please follow us on Twitterand LinkedIn.

The European thematic fund market presents interesting opportunities for asset managers and ETF issuers, particularly in the passive sphere, according to Cerulli Associates.

The three-year anniversary of BNY Mellon Investment Management’s launch of ETFs was marked by the quarter one growth of 172 per cent, making it the fastest growing ETF issuer in US equity ETFs and in the top 40 issuers overall.

The overall trend in retail subscriptions to mutual funds in Korea is shifting gradually toward ETFs, as exchange-traded offerings have become more tailored and customised to retail needs, reveals Cerulli Associates.