Nordic ETF Trends 2023

The Nordic ETF Trends 2023 supplement highlights the evolving landscape of exchange-traded funds (ETFs) in the Nordic region and Europe amidst recent market challenges. Institutional investors in the Nordics predominantly use ETFs for tactical allocations, with about 40% employing them for short-term positioning, while a smaller share uses ETFs strategically. Despite a portion of Nordic investors not using ETFs, the European ETF industry saw net inflows of approximately EUR 82 billion in 2022, marking resilience amid adverse conditions. Growth drivers include increasing environmental, social, and governance (ESG) focus—accounting for 65% of ETF inflows last year—and the rise of active ETFs, which are gaining traction as they blend passive and active management features.

Discussions from the 2023 ETF Roundtable in Helsinki emphasize sustainability, regulation, and fixed income as key focal points. Investors reported a more active and tactical approach to ETF usage, particularly within ESG and emerging markets. Product development is increasingly granular, with bespoke ESG indices and thematic funds responding to diverse investor needs, though concerns remain about overlapping holdings in thematic ETFs and the complexity of ESG criteria, especially in fixed income products. Market participants foresee continued innovation in fixed income ETFs and stress the importance of transparency and understanding underlying ETF holdings. The industry also anticipates growth in retail adoption facilitated by digital platforms, with a significant potential impact from future approval of non-transparent active ETFs, which could revolutionize fund distribution in Europe.

Looking ahead, expert insights predict that by 2030, assets under management in European ETFs could double to around EUR 2.5 trillion, driven by broader retail acceptance, sustained ESG integration, and expanding product variety in both equity and fixed income spaces. Thematic and sustainability-linked ETFs, aligned with measurable sustainable development goals, are expected to gain market prominence. Meanwhile, digital innovation and tailored ETF solutions will continue to meet evolving investor demands, positioning ETFs as both strategic tools and tactical instruments in diversified portfolios.

The report is only available to subscribers

If you’re new to Tell Media Group, create an account first.

Table of content

Editorial Overview and Industry Context

An introduction to the 2023 Nordic ETF Trends supplement highlighting the challenging investment environment of 2022 and the importance of ETFs. The editorial discusses the annual ETF roundtable in Helsinki, insights from Nordic investors, and expert commentary on European ETF industry developments.

Nordic ETF Usage and Market Trends

An analysis of how Nordic investors predominantly use ETFs for tactical allocations, with emerging uses in strategic allocations. Overview of ETF inflows into Europe, the growing importance of ESG ETFs, online distribution channels, and the increasing interest in active ETFs despite their smaller market share.

2023 ETF Roundtable: Insights from Industry Leaders

Summary of discussions among ETF providers and Finnish investors addressing current ETF usages, tactical versus strategic roles, and active management within ETFs. Key themes include product evolution, ESG integration, fixed income developments, and market adaptation during volatile periods.

Challenges in Thematic and ESG ETF Offerings

Industry concerns about overlapping holdings in thematic and ESG ETFs, the need for greater research and product differentiation, and the complexities in ESG standardization. Participants emphasize the importance of transparency, diversified exposure, and evolving ESG engagement strategies.

Product Development and ESG in ETFs

Exploration of increasing granularity in ESG ETF products, the balance between bespoke and standardized offerings, and the challenges in adapting products to regulatory changes and investor demands. Special attention is given to fixed income ESG ETFs as a growth area requiring enhanced innovation.

Lessons Learned from Market Volatility

Reflections on ETF performance and usage during 2022’s challenging market conditions, highlighting the value of fixed income ETFs for liquidity and price discovery, the necessity of understanding underlying ETF holdings, and the enduring need for portfolio diversification.

Investor Perspectives: Nordic ETF Usage and Needs

Q&A with Nordic investors detailing their multifaceted use of ETFs for both strategic and tactical allocations. Discussions focus on sustainable ETF development, the relative maturity of equity versus fixed income ESG products, issues related to ETF oversupply, and operational challenges such as taxation and transparency.

External Expert Insight: Future Outlook for European ETFs

Detlef Glow of Refinitiv provides an outlook on European ETF industry growth driven by increased retail adoption, expansion of bond ETFs including specialized segments, rise of ESG thematic investing, and the potential game-changing impact of active and non-transparent ETFs on fund distribution.

About Tell Media Group and Editorial Team

Information about Tell Media Group, the publisher of the Nordic ETF Trends supplement, including contacts and team members contributing to the publication.