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Laxman Pai, Opalesque Asia:

The European exchange-traded fund (ETF) market reached a "record" high last year as overall inflows surpassed €100bn ($110bn) for the first time.

European ETFs gathered a record €100.8bn in 2019, bringing total assets to €870bn (up 40 percent on 2018), according to Lyxor ETF Research's Money Monitor 2019 report.

ETFs now represent 7% of total European funds' assets (vs. 6% in 2018), with Equity ETFs accounting for 69% of the market, Fixed Income for 27% and Commodities for 3%, the remaining being in the other asset classes.

European investors turned to higher-yielding opportunities (Corporate Bonds, US Government Bonds, Emerging Markets Bonds, High Yield) and geographical diversification was key, mostly outside €ope.

Whilst it's taken several years for the Fixed Income ETF segment to take off, the trend observed over the past 5 years looks solid and resilient with an average € 26bn of annual inflows.

With regards to Equities, 2019 was a year of contrasts. European equity markets bore the brunt of rising macro-economic uncertainties. There was the threat of 'no deal' Brexit in the first half, but the second half saw a sharp rebound on the back of easing trade tensions.

ETFs benefitted from the rebound, gathering €46bn while active equity funds saw outflows of €43bn.

UK equities represented an interesting example of open-ended funds-to-ETF rotation. In the context of Brexit, we observed very strong flows into UK equity ETFs ......................

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