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U.S. ETF Giants Look to Europe


Several large U.S.-based providers of exchange traded funds are looking to the fast-growing European ETF market as a new growth frontier.

ProShares, Guggenheim and Charles Schwab (SCHW) are mulling plans to expand in Europe, reports Madison Marriage for the Financial Times. The issuers are the sixth-, eighth- and tenth-largest U.S. ETF issuers, respectively.

News of more U.S.-based ETF providers potentially expanding in Europe comes as some of their rivals have recently done just that.

In late January, WisdomTree (WETF), the fifth-largest U.S. ETF issuer, said itwill expand its presence in Europe with acquisition of a majority stake in Boost, a boutique provider of inverse and leveraged ETFs. [WisdomTree Expands in Europe]

Although the European ETF market is small compared to the U.S. with just $395 billion in assets at the end of last year, assets surged 20% in 2013, according to the FT.

Like the U.S. market, the European ETF marketplace is dominated by three providers – BlackRock’s (BLK) iShares, Deutsche Bank (DB) and Lyxor. As the FT notes, even State Street’s (STT) State Street Global Advisors and Vanguard, the second- and third-largest U.S. ETF sponsors, currently have tiny slices of the European ETF market.

In Europe, Deutsche Bank and Lyxor primarily offer derivatives-based products, also known as synthetic ETFs. Europe’s UCITS fund rules allow for easy issuance of such products.

Earlier this year, former iShares CEO Lee Kranefuss said increased ETF competition in Europe could bolster inflows.

BlackRock’s iShares ETFs make up almost half of the assets held in European-listed ETFs, up from under a third at the end of 2010. That dominance has prompted calls, even from BlackRock, for more ETF competition in Europe. [Is Competition in Europe's ETF Market Stifled?]

ETF Trends editorial team contributed to this post.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.