More than a quarter of active ETFs in Europe closed last year, as the new area of the market struggles to gain traction, data from Hargreaves Lansdown shows.
At the start of 2016 there were 30 active ETF products across Europe, compared to 36 at the start of 2015. However, at least four new products were launched in the past year, meaning the number of closures is more than 10.
The db X-trackersSCM Multi Asset ETF was one such closure last year. Run by wealth management firm SCM Private, the first ETF of ETFs was launched in March 2012, but closed after the funds under management dropped below £500,000.
GAM also made the move to shut its range of Julius Baer-branded Smart Equity active ETFs last year, after they failed to gain assets. At the time the firm said more education was needed of advisers on active ETF products.
Europe is bucking the trend seen elsewhere in the world, says Adam Laird, head of passives at Hargreaves Lansdown.
“Looking globally, this is against the trend. In the USA, there was an 11 per cent increase in the number of active ETFs, from 125 to 139. In the rest of the world, it increased by around a third,” says Laird.
One big launch into the space last year was Vanguard, which unveiled a range of four active ETF products for the UK market. The ETFs have a factor-based investment strategy and are exposed to value, momentum, liquidity and minimum volatility.