Nordic ETF Trends 2018

The 2018 Nordic ETF Trends supplement highlights the ongoing evolution and growth of ETFs, particularly in the Nordic region where ETFs have been predominantly institutional products but are poised for expansion into the wealth management segment. Key industry leaders from BlackRock/iShares, Invesco, J.P. Morgan Asset Management, and Vanguard discussed trends such as the increasing importance of fixed income ETFs, fee-based advisory models driven by regulation, and the emergence of active ETFs combining active management with ETF structures. While the ETF market in Europe continues to grow rapidly—with assets reaching USD 835 billion by August 2018—many Nordic fund selectors have yet to fully integrate ETFs into their selection processes, often due to a focus on active products and the technical complexities, especially in fixed income ETFs.

The report also addresses the challenges and developments of incorporating Environmental, Social, and Governance (ESG) criteria into ETF investing. Nordic investors, including major pension funds and asset managers, are seeking ESG-compliant ETF products to align passive investments with their responsible investment policies. However, issues remain with liquidity, narrow product offerings, and the variability in ESG standards across providers. Despite these hurdles, demand for ESG-focused ETFs is growing, and product innovation continues to improve to meet investor needs. Finnish investors, in particular, have been at the forefront of ETF usage, employing ETFs strategically and tactically across asset classes, while noting improvements in fees, index construction, and growing consideration of factor-based and ESG ETFs.

Overall, the supplement underscores the transformative role ETFs are playing within Nordic asset management, driven by regulatory changes, cost-efficiency, technological advancements, and evolving investor preferences toward transparency and responsibility. The industry anticipates continued growth fueled by increasing adoption among wealth managers, enhanced product innovation such as active and ESG-themed ETFs, and greater education around ETF liquidity and due diligence. This aligns with the broader European market trajectory, where ETFs are becoming central building blocks of modern portfolios and asset allocation strategies.

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Table of content

Introduction to Nordic ETF Trends 2018

Overview of the third annual Nordic ETF Trends supplement featuring insights from investors and product providers, including a London roundtable with major industry players. Highlights include the institutional dominance of ETFs in the Nordics and the anticipated growth driven by wealth segments and fee-based advisory.

News and Industry Updates

Key personnel appointments in the Nordic ETF sector, including new leadership at Lyxor, State Street Global Advisors, and J.P. Morgan AM. Launches and business developments such as Nordea’s first ETF product and BankInvest’s robo-advisory “Darwin” service showcase ongoing innovation in the region.

The Growth and Statistics of ETFs in Europe

Presentation of ETF industry data as of 2018, showing asset growth to USD 835 billion, increasing listings and providers, underscoring the rapid expansion and maturation of the European ETF market.

Selecting ETFs: Perspectives from Nordic Fund Selectors

Discussion on the current adoption of ETFs by Nordic fund selectors, emphasizing their cautious approach but growing confidence in integrating ETFs into investment strategies. Highlighted is the similarity in due diligence between selecting active managers and ETFs, and the potential for selectors to add value, particularly in fixed income ETFs.

Interview with Mussie Kidane, Pictet Wealth Management

Insights into passive investment strategies and ETF selection at Pictet, including operational due diligence, evolving ESG integration, challenges in fixed income ETF investments, and the liquidity considerations that influence ETF deployment.

Understanding ETF Liquidity and Trading

An educational overview explaining the sources of ETF liquidity beyond on-screen average daily volume, including exchange liquidity, over-the-counter activity, and underlying securities liquidity, emphasizing the importance of professional guidance to fully assess trading costs and options.

ETF Industry Roundtable in London

A comprehensive discussion involving representatives from BlackRock/iShares, Invesco, J.P. Morgan Asset Management, and Vanguard touching on product innovation, fee trends, the shift from futures to ETFs, asset allocation strategies, the rise of fixed income and factor ETFs, active ETFs and transparency issues, and the evolving landscape of ETF adoption in the Nordic region.

ESG Integration in ETF Investing

Exploration of challenges and considerations Nordic investors face when aligning ETF investments with ESG policies. The section discusses the limited availability and higher costs of ESG-compliant ETFs, varying investor approaches to ESG standards, and the ongoing work to reconcile passive investment strategies with responsible investment mandates.

Finnish Investor Profiles and ETF Usage

Highlights from interviews with Finnish financial institutions Mandatum Life, Elo Pension, OP Financial Group, and Varma, focusing on their strategies for ETF integration, growth in factor and ESG ETFs, liquidity challenges, and evolving ETF product sophistication in both equity and fixed income portfolios.

About Tell Media Group and Publishing Schedule

Information about the publisher, editorial contacts, and the planned publishing dates for Nordic Fund Selection Journal in 2019, supporting further industry coverage and analysis.