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iShares Increases European ETF Market Dominance

Written by Paul Amery

May 01, 2013 16:51 (CET)

BlackRock’s ETF arm iShares has continued to build on its dominant position in the European ETF market, according to new data from Deutsche Bank.

During the first four months of the year iShares has seen its European market share rise from 41.8 percent to 43.2 percent, while its nearest three rivals, db x-trackers, Lyxor, and Credit Suisse, lost 0.2, 0.6 and 0.4 percent market share, respectively.

db x-trackers currently manages 14.4 percent of the European ETF market’s assets, Lyxor 11.5 percent and Credit Suisse 4.9 percent.

Some providers outside the top four have seen their market share grow this year.

UBS and Amundi have increased their market share by 0.2 percent each and State Street and Source by 0.4 percent each.

The competitive landscape in the European ETF market faces increasing scrutiny as a result of iShares’ agreement, announced in January, to acquire Credit Suisse’s ETF arm.

According to recent press reports the deal is being investigated by competition authorities in both the UK and Ireland.

Reports say that the UK’s Office of Fair Trading (OFT) is contacting some of BlackRock’s ETF clients to gain their opinion on the proposed merger, with a particular focus on its potential impacts on competition, product choice and pricing.

A combined iShares/Credit Suisse entity would have a market share of around 75 percent in the physical European ETF market, according to estimates from consultancy ETFGI.

In recent months db x-trackers and Lyxor have announced changes to their business models, emphasizing an increased role for physically replicated funds, as opposed to the derivatives-based replication traditionally favoured by these investment bank-owned issuers.

Europe’s latest ETF fund flow data suggest that these changes have not yet succeeded in changing the tide for the two firms.

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