Equity ETFs cheaper than index tracking funds

The average total expense ratio for equity ETFs in Europe is around 51 basis points (bps) lower a year than the average equity index tracking fund, according to BlackRock.

The firm's ETF Landscape at the end of the second quarter shows the average TER for equity ETFs in Europe is 40bps, compared with 91bps for equity index funds and 180bps for the average equity fund.

BlackRock also predicts global ETF assets will grow by 20-30% in 2010. In Europe, there were 961 ETFs at the end of Q2, with assets of $218bn.

The report shows net sales of mutual funds in Europe were $73.5bn while net sales of ETFs domiciled in Europe were $23.6bn during the first five months of 2010.

Fixed income is the most popular underlying asset class, seeing 23.4% of assets in Europe, followed by ETFs covering European country indices, with 14.6%.

It shows year-to-date, 135 new ETFs were launched in Europe, while a further 65 are in the pipeline.

iShares remains the largest provider of ETFs in Europe in terms of product number and assets, with 173 ETFs and $77.9bn, representing a market share of 35.7%.

Lyxor follows with 133 products and assets under management of $41.6bn, with a market share of 19.1%.

The report shows db x-trackers has 135 products, assets of $35.9bn and a 16.5% market share.