April 17, 2023

Democratisation of ETF market is underway; record levels of life insurance use and platform availability

2022 was a challenging year for the asset management industry, both in terms of performance (average falls of 10% for global bond funds, 14% for balanced funds and 16% for global equity funds) and for fund flows, with outflows totalling a record of EUR 230 billion globally.  Meanwhile, ETFs attracted EUR 67 billion of inflows, in line with average annual net inflows of about EUR 70 billion over the past ten years[1].

The trend has continued into 2023; whereas net flows into actively managed funds are flat, ETFs have attracted inflows of more than EUR 40 billion in the first three months of the year.  At the same pace, this would equate to EUR 160 billion over the full year.

So what are the reasons for this success?  The Quantalys Harvest Group ETF Management Observatory, in partnership with BNP Paribas Asset Management (‘BNPP AM’), highlights several points from a European perspective:

  1. Broader range of strategies now available via ETFs.  For long the preserve of equity markets, other ETF strategies, such as bonds, are becoming increasingly popular and in 2022 bond ETFs accounted for 25% of the total ETF market by value.
  2. ESG ETFs gaining in popularity.  In 2022, ESG ETFs attracted greater net inflows (EUR 44 billion) than non-ESG ones (EUR 24 billion). This trend began in 2021 and gathered pace in 2022, when ESG ETFs accounted for 65% of net flows compared to 55% the previous year.
  3. ETFs take advantage of the growing thematic trend.  In 2022, investors further expanded their international diversification via ETFs exposed to global markets (with inflows up 14% YoY) and thematic ETFs (which accounted for a quarter of equity ETFs at the end of 2022).
  4. Increasing popularity with wealth management and private investors.  Having previously been the prerogative of European institutions, ETFs are becoming more popular with individual investors via online brokers and finance apps, according to the AMF[2]’s latest barometer on savings in the French market.  Quantalys Harvest Group also notes that financial advisors are increasingly using ETFs in their fund selection.  In addition, ETFs are being used increasingly in the life insurance market in France.  The number of contracts that contain at least one ETF has risen by six percentage points YoY, from 38% in 2021 to 44% in 2022.  These contracts referenced an average of 31 ETFs in 2022 compared to 20 in 2022, an increase of 55%.
  5. The pressure on fees remains strong throughout Europe.  At the end of 2022, the European Commission reaffirmed its desire to ban retrocessions in the distribution of financial products.  In life insurance, unit-linked fees have returned to the spotlight.  Following urgent statements by the ACPR[3] and EIOPA[4], France Assureurs[5] has asked its members to step up the review of the units of account referenced in their contracts with a view to moderating the level of final fees paid by investors and favouring ETFs and clean share UCITS.

For all these structural reasons, the Quantalys Harvest Group ETF Management Observatory, in partnership with BNP Paribas Asset Management, anticipates continued high inflows in Europe in 2023, in line with the average inflows of previous years.  Helped by the popularity of ESG and thematic strategies, inflows are forecast to exceed EUR 100 billion this year.

Jean-Paul Raymond, Director of Research and Development, Quantalys Harvest Group, comments:
“The 2022 Observatory illustrates the ongoing ETF breakthrough in wealth management and retail via life insurance.  The growth of guided management or management under mandate, encouraged by MIFID II, and the resulting rise of ETF mandates will lead to further changes and the increased popularity of ETFs.  In addition, changes in management practices - more tactical, more digital, more thematic or more committed (i.e. focused on ESG) - favour ETFs.  It is therefore imperative for an independent analysis company such as Quantalys to help its clients better understand and analyse these tools, to understand their specific risks and to anticipate future changes.  This is why we have decided to open a dedicated ETF section on our platform and to develop tools dedicated to these products in our portfolio management modules.  We have also decided to launch the ETF Management Observatory with BNP Paribas Asset Management to provide reliable, independent and in-depth data on the market at a European level.”

Lorraine Sereyjol-Garros, Global Head of ETF and Index Fund Development at BNPP AM, adds:
“ETFs and index funds managed to hold their own in a difficult year thanks to a very strong focus on sustainable approaches, and 2023 looks promising in terms of inflows.  Our client base is also expanding, helped by the growth drivers of private banking and wealth management.  In particular, this is due to digital platforms, which are very popular with millennials and allow savers to familiarise themselves with ETFs.  It is within the framework of this investor education approach that we have joined forces with Quantalys Harvest Group in order to democratise the use of ETFs among as great a number of investors as possible.”

- ENDS -



  1. ^ [1] All data in this document is sourced from Quantalys, using information contained within the Observatory. Calculations made by Quantalys are based on data sent to it daily by management companies. Although Quantalys has taken all reasonable care in collecting and verifying data from sources believed to be reliable, it cannot guarantee the accuracy of data sent to it. Quantalys accepts sole responsibility for any errors.
  2. ^ [2] Autorité des marchés financiers
  3. ^ [3] Autorité de contrôle prudentiel et de résolution
  4. ^ [4] European Insurance and Occupational Pensions Authority
  5. ^ [5] French Federation of Insurance

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