Only every third ETF is profitable

The assets under management of European ETF providers have doubled to 550 billion euros within five years. More and more asset managers are pushing into the market, and want to maintain investors through a broad and continuously expanding product range, which threatens the margins of niche managers.

Despite the high inflows into ETFs, many products do not reach a cost-covering volume because the market is too fragmented, says Bloomberg, which would lead to a consolidation of the market in the coming years.

While the average volume of an ETF in the United States amounts to about 1.4 billion Dollar, European products are six times smaller and reach only 260 million USD. In Europe, an ETF requires at least 100 million in assets to be profitable, says Bloomberg. However, only 700 of the 2,200 European products reach this investment volume. Small funds lack cost efficiency and liquidity, and would have to close.