Generation Z and Millennials have emerged as a driving force for growth in the European ETF market, while ETFs are largely owned by the 35-54 age group (63%).
BlackRock, which commissioned a YouGov study into the topic, argued that this younger cohort of ETF investors could be as a result of them being more comfortable with self-directed decision making and the emergence of online investment platforms.
Assets on European digital investment platforms have grown 20% annually since 2019 to almost $2trn, according to BlackRock data. ETFs have helped to fuel this growth, and are expected to do so in future.
The UK growth rate in the ETF market is anticipated to be as high as 56% over the next year, the research predicted, one of several ETF markets across 14 European countries that were analysed by the report.
Across Europe, 54% of new ETF investors are expected to be 18 and 34 years old, compared to only 32% of new investors who will be aged 35 to 54. This represents a reversal in ownership, as those over 35 will then represent only 46% of ETF owners.
Jane Sloan, EMEA head of iShares & index investments at BlackRock, said: “We continue to see strong acceleration in ETF adoption by younger investors over the course of 2023.”
Two fifths (41%) of Europe’s new ETF investors are also expected to be first time investors who have learnt about investments through digital platforms and value what BlackRock described as the simplicity and low-cost of ETFs.
In terms of market size, Germany represents the largest number of ETF investors in Europe, which the firm attributed to the evolution of digital distribution platforms and increasing popularity of ETF savings plans.
Just over two million Germans who do not currently invest in ETFs indicated they are very likely to invest using an ETF in the next 12 months, representing a potential relative growth of 22% in the German ETF market.
Of these, just under half (43%) do not hold any investments and indicated that they are “very likely” to start investing using ETFs.
ETF demand remains high as active popularity continues to surge
Countries with low ETF market penetration represent the greatest growth potential, however. In Spain and Portugal, just over a million people said they are very likely to invest using an ETF in the next 12 months, representing a relative combined growth of 64%.
France, Belgium, and the Netherlands also showed a high combined growth rate at 42%.
BlackRock said that this data indicated the low cost and accessibility of ETFs made them especially attractive to first time investors.
