Passive funds continue to gain share of the global asset management market at the expense of active funds. In the United States, the leading market for this type of product, they represent 38% of total assets. In Europe, they approach 20% and in Asia, 30% (data as of end 2017).
The dynamics in the equity segment…
The trend is more evident among equities. According to Morningstar data, in the United States, 45% of total assets are in index products; in Europe about a third (data at the end of 2017). The highest growth rates are recorded in Asia, where the share of index fundsspecialists on Stock Exchanges exceeded 47% (the purchase of ETFs by the Japanese Central Bank certainly contributed to this increase).
… and in the bond market
In fixed income, the preference for passive funds is less evident. In the United States alone, they continued to gain market share in 2017, reaching 30%. In Europe, the percentage of total assets remained stable and in Asia it decreased compared to 2016.
Regional differences
In most markets, net inflows were positive for both active and passive equity funds. The United States is an exception, where the former have suffered ransoms. In any case, there are differences in the flows towards the two strategies from region to region. For example, among equity products cross-border (domiciled in countries such as Luxembourg or Ireland), the active funds they had higher net subscriptions. As far as fixed income is concerned, passive management still represents a minimal share of total flows, excluding the United States.
BlackRock primacy
The growing popularity of passive funds is reflected in the ranking of management companies by flows (in active and index products) globally. In 2017, BlackRock ranks first with more than $400 billion, of which more than 240 billion raised by iShares on ETFs. In second place is Vanguard, which however remains first for managed assets. The combined assets of the two giants, amounting to 7,5 trillion, are almost equivalent to the total of the other eight investment houses that make up the top 10.
SOURCE: Morningstar
