Here are the bottom 10 performers for 2008, with leveraged funds included:

And here is the list excluding leveraged ETFs:

At the bottom of the 2008 tables, we find the truly astonishing euro return of -96.75% from the ICEQ ETF, an investment which combined the delisting during 2008 of several of the Icelandic OMX-15 Index's component stocks, a 77% fall in price (!) on one day, 14 October, the bankruptcy of the ETF issuer (Kaupthing) and a halving of the Icelandic krona's value against the euro to round things off.

Four Russian-equity-related ETFs make it into the top five worst performers as well, losing close to three-quarters of investors' cash during the year. How times change! Little under a year ago, the February 2008 Merrill Lynch investor survey showed a net 73% of institutional investors overweight in the country, with Russia topping the list of preferred emerging markets at the time.

Other big losers in 2008 included two private equity ETFs, the gasoline ETC and Lyxor's MSCI Greece fund.

Fund Sizes And Fund Flows

The European top 10 ETF table is dominated by country equity funds and different versions of the DJ EuroStoxx 50 large-cap benchmark index, as it has been for some time. Still, three new entrants appeared on the list in 2008: the db x-trackers II Eonia TRI ETF, the Lyxor ETF Euro Cash EONIA ETF and the ZKB Gold Fund. Needless to say, the rise of two cash funds and a gold bullion ETF into the list of the 10 largest European ETFs says something about the state of the market in 2008.

Top 10 European ETFs By Size

Full-year data is not yet in on fund flows in the European space, but the biggest net gainers/losers by assets under management through 30 November 2008 include cash ETFs, country ETFs and the ZKB Gold fund (figures are taken from BGI's December 2008 ETF Landscape publication).

European ETFs With Largest AUM Change In 2008

Interestingly, while the DAX and EuroStoxx 50 ETFs are amongst the biggest decliners by assets under management (likely due to market movements), the two funds in the table tracking US equities showed significant growth, suggesting large cash inflows to overwhelm the negative market returns.

Another standout in the net gainers/losers table is the ETFlab DAX ETF, which has gone from zero to over €1.3 billion in size during 2008, incidentally almost matching the decline in the AUM of the equivalent iShares fund.

Conclusion

With the recent sharp declines in interest rates, it may well be difficult for the cash ETFs—the biggest gainers in European market share during 2008 - to retain their assets this year. The other big question for the European ETF market is whether fixed-income ETFs—which expanded their overall share from 16% to 27% during the year—can hold their gains, or whether equity funds will make a comeback.

Overall, despite the large losses suffered by many funds, the assets under management figures for European ETFs show a market that is still in a robust growth phase, with significant investor inflows. In our next feature, we will examine the ETF product providers' market shares and net gains and losses during the year, and review individual managers' ETF ranges and profiles.

1 | 2 |