Passive investing boom reaches Europe as assets hit $1tn

Europe has rushed to join the passive investing boom, with the assets held in exchange traded funds surging beyond the $1tn mark for the first time as disenchantment with stockpickers grows.

The industry hit the milestone last month after investors ploughed a record $125.2bn of new cash into European-listed ETFs last year, more than double the $56.8bn in 2018, according to preliminary data from ETFGI, a London-based consultancy.

The sector has doubled in size in just four years in Europe, turbocharged by a brutal price war on fees, the patchy performance of active managers and another year of robust returns for many of the big stock markets that passive vehicles replicate.

Nine out of 10 actively managed pan-European equity funds underperformed a passive benchmark over the 12 months ending June 30, the latest period for which comprehensive data is available. Active pan-European fund managers could only demonstrate a modest improvement in performance over longer periods up to 10 years, according to S&P Dow Jones Indices.