TRENDS IN THE EUROPEAN ETF INDUSTRY

Detlef Glow

Head of Lipper EMEA Research

(ALL DATA AS OF MARCH, 31 2012)

Table of Content

�A brief history of ETFs in Europe 3

�Assets under management 7

�Fund flows – ETFs in Europe 15

Source: Lipper

�Structure of the European ETF market 18

�New ETFs 21

� The ETF death list 31

� Summary 35

� Disclaimer 37

EXCHANGE TRADED FUNDS IN EUROPE

A Brief History of ETFs in Europe

�2000 – Launch of ETFs in Europe (Merrill Lynch)

�2001 – SWAP based ETFs (Lyxor)

�2001 - Sector ETFs on MSCI Europe (State Street)

Source: Lipper

�2001 - Sector ETFs on MSCI Europe (State Street)

�2003 – Bond ETFs (Indexchange – iShares)

�2004 – ETFs on Emerging Markets

A Brief History of ETFs in Europe

� 2005 – Strategy ETFs (Lyxor)

�2005 – Commodity ETFs (EasyETF)

�2006 – Gold ETFs (backed with Gold) (ZKB)

Source: Lipper

�2006 – Gold ETFs (backed with Gold) (ZKB)

�2007 – Money Market – EONIA (db x-trackers)

�2007 – Short and leveraged ETFs

A Brief History of ETFs in Europe

�2007 – Strategy ETFs on credit spreads

�2008 –100 billion EUR in assets under management

�2009 – ETFs on hedge fund strategies

Source: Lipper

�2009 – ETFs on hedge fund strategies

�2010 – 200 billion EUR in assets under management

ASSETS UNDER MANAGEMENT

ETFs - Assets Under Management (10/2005 – 03/2012)

160

180

200

220

240

260

ETFs in Europe - Assets under Management (in Billion Euro)

Equity Bond Real Estate Other Commodities Money Market

Source: Lipper

0

20

40

60

80

100

120

140

ETFs - Assets Under Management (03/2011 – 03/2012)

140

160

180

200

220

240

260Equity Bond Real Estate Other Commodities Money Market

Source: Lipper

0

20

40

60

80

100

120

Assets Under Management

�Assets under management grew by 3.75% up to 230.71

billion Euro in 2011

�Assets under management grew by 8.71% up to 250.81

Source: Lipper

�Assets under management grew by 8.71% up to 250.81

billion Euro in Q1-2012

Promoter Market Share by AUM (31.03.2012)

iShares40.59%

CS ETF

Other Promoters

20.58%

State Street4.39%

Source: Lipper

db x-trackers13.96%

Lyxor11.78%

UBS3.62%

CS ETF5.07%

Promoter Market Share by AUM

60%

70%

80%

90%

100%

iShares Lyxor db x-trackers CS ETF UBS Other Promoters

Source: Lipper

0%

10%

20%

30%

40%

50%

Summary Assets Under Management

�The European ETF market is highly concentrated

�The top five ETF promoters account for 75.79% of AuM

�46 of the 1711 ETFs hold assets above 1 billion EUR

Source: Lipper

�46 of the 1711 ETFs hold assets above 1 billion EUR

� 23 equity funds

� 11 bond funds

� 9 commodity funds (8 gold, 1 silver)

� 2 money market funds

� 1 real estate linked equity fund

Summary Assets Under Management

�The largest ETF (iShares DAX) holds 5.05% of overall

AuM

�Top ten ETFs account for 25.94% of overall AuM

Source: Lipper

�Top twenty ETFs account for 36.26% of overall AuM

�Top 46 ETFs account for 49.11% of overall AuM

FUND FLOWS

ETF Fund Flows - 2011 (in Million Euro)

12,270.6

8,000.0

10,000.0

12,000.0

14,000.0

Source: Lipper

-331.6

3,522.3

-688.3

158.1

-2,000.0

-

2,000.0

4,000.0

6,000.0

Equity Bond Commodity Other Money Market

ETF Fund Flows – Q1/2012 (in Million Euro)

3,077.8

1,487.4 1,500.0

2,000.0

2,500.0

3,000.0

3,500.0

Source: Lipper

770.7

21.5

-992.8

-1,500.0

-1,000.0

-500.0

-

500.0

1,000.0

Equity Bond Commodity Other Money Market

MARKET STRUCTURE BY NUMBER OF FUNDS

ETFs in Europe by Fund Domiciles (31.03.2012)

Total Bond Equity Commodities Real Estate Money Market Other

Germany 117 29 81 1 3 2 1

France 397 47 273 12 8 4 53

Ireland 477 86 333 21 9 5 23

Luxembourg 573 75 333 39 9 19 98

Other 147 16 40 74 1 - 16

# 1711 253 1060 147 30 30 191

Source: Lipper

1293

418

0

200

400

600

800

1000

1200

1400

Primaries Non-Primaries

Market Share per Asset Type 31.03.2012

Equity64%

Bond20%

Real Estate1%

Other3%

Money Market2%

Commodities10%

Equity62%

Other11%

Money Market2%

Commodities9%

Real Estate2%

by Assets under Managementby Number of Funds

Source: Lipper

Bond15%

2%

NEW FUNDS LAUNCHED 2011

New ETFs Launched 2011

193

100

150

200

250

Source: Lipper

42 32

3

36

4

0

50

100

New ETFs Launched 2011

Total Bond Equity Commodities Real Estate Money Market O ther

Germany 34 5 28 - 1 - -

France 35 10 19 - - - 6

Ire land 91 15 52 18 - 2 4

Luxembourg 134 10 89 10 2 1 22

Source: Lipper

Luxembourg 134 10 89 10 2 1 22

O ther 16 2 5 8 1 - -

# 310 42 193 36 4 3 32

New ETFs Launched 2011 – Assets Under Management

5

6

7

8

9

10Equity Bond Real Estate Other Money Market Commodities

Source: Lipper

0

1

2

3

4

New ETFs Launched – Market Share by AUM (31.12.2012)

Bond17%

Real Estate1%

Other5% Money Market

1%

Commodities5%

Source: Lipper

Equity71%

NEW FUNDS LAUNCHED Q1/2012

New ETFs Launched – Q1/2012

Bond19

Equity31

20

25

30

35

2

7

Source: Lipper

19

Other7

Money Market1

Commodities4

Real Estate0

0

5

10

15

20

New ETFs Launched 2012– Assets Under Management

0.6

0.8

1Equity Bond Real Estate Other Commodities Money Market

Source: Lipper

0

0.2

0.4

New ETFs Launched 2012– Market Share by AUM

Equity22%

Real Estate0% Other

10%

Money Market1%

Commodities4%

Source: Lipper

Bond63%

New ETFs Launched 2012 - Activity by Promoter

Amundi1

SPDR5

Julius Baer5

Lyxor19

Source: Lipper

5

Ossiam2

Easy ETF1

db x-trackers16

UBS11

THE ETF DEATH LIST

Is the ETF Industry Going to Consolidate?

�542 ETFs in Europe are older than 3 years

�241 of these ETFs are smaller than 100 million Euro

Source: Lipper

These 241 ETFs might be under review for profitability

reasons by the fund promoters …

Is the ETF Industry Going to Consolidate?

… but, ETFs do not only generate income from

management fees. Other income like creation and

redemptions fees need also to be taken into account to

evaluate the profitability of an ETF.

Source: Lipper

evaluate the profitability of an ETF.

In addition some of these ETFs have been launched for

marketing reasons or to complete product ranges.

Is the ETF Industry Going to Consolidate?

�AuM is no valid measure to evaluate the profiability of an

ETF.

� Other reasons (complete product offering) might drive

Summary

Source: Lipper

� Other reasons (complete product offering) might drive

the decission making of fund promoters.

�No trend to consolidation in the ETF industry

foreseeable at the moment

SUMMARY

Summary

�The European ETF market is highly concentrated

�AuM in the ETF sector will continue to grow– growth rate will be lower

– impact from market movements will increase

Source: Lipper

– impact from market movements will increase

�Number of funds will also grow further

– not all markets have already covered by ETFs

– strategy ETFs may become more important

� ETF industry does not show a trend towards

consolidation

DISCLAIMER

© Thomson Reuters 2011 All Rights Reserved.

This presentation is for informational purposes only, and do not constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction.

No guarantee is made that the information in this presentation is accurate or complete and no warranties are made with regard to the results to

37

warranties are made with regard to the results to be obtained from its use.

In addition, Lipper will not be liable for any loss or damage resulting from information obtained from Lipper or any of its affiliates.