BlackRock and extraETF raise growth projection for ETF savings plans
Savings plans based on exchange-traded funds (ETFs) are becoming increasingly popular among German investors according to research by extraETF, an independent information and research provider, commissioned by BlackRock.
The number of ETF savings plans in Germany is expected to rise to around nine million by 2025, representing an average annual growth rate of 35 percent from the end of December 2020, when there were just two million ETF savings plans. Previously, the extraETF analysts had expected an average growth rate of 30 percent and an increase to seven million contracts. The annual savings volume is expected to increase from the current EUR3.6 billion to EUR15.7 billion in the same period, representing an average annual growth of 34 per cent.
Christian Bimüller, Co-Head Digital Distribution in the Europe, Middle East and Africa (EMEA) region at BlackRock, says: "ETF savings plans are intuitive to understand, cost-effective, transparent and flexible to use – just like exchange-traded funds themselves. Consumer associations, consumer websites, financial bloggers and trade media have been confirming this for quite some time. Now more and more individual investors are also becoming aware of these advantages and are using ETF savings plans as part of their financial investment and long-term wealth creation. The growing interest is also reflected in the fact that our ETF savings plan calculator is the most visited content page at iShares in Europe. Investors use this tool extensively, which is reflected in the significantly longer time spent on it compared to our other websites. Our guide to ETF savings plan investing and the option to set up a savings plan are also among the favourites of our online users."
To mark the 20th anniversary of ETFs in Germany in May 2020, BlackRock and extraETF had prepared a forecast on the further development of the ETF savings plan market. At that time, the experts had already expected strong growth. They have now raised their forecast based on the recently published market data for 2020. The underlying scenario includes the assumption that the average savings rate will continue to rise. To reflect this, the analysts now expect an average monthly savings rate of 165 euros instead of the previous 150 euros.
Markus Jordan, founder and publisher of the investor platform extraETF.com and editor of the trade magazine Extra-Magazin, says: "We have revised our previous estimates upwards because the demand for ETF savings plans is increasing and the average savings plan rate is also rising. The reasons for the continued growth are manifold: New providers like Scalable Capital Broker enrich the market. Existing providers such as the neo-broker Trade Republic are expanding their range of savings plan-capable ETFs. Providers such as ING Deutschland and flatex are converting their ETF savings plan offerings to fee-free models. And the minimum investment amounts continue to decline, so that investors can now build up assets continuously from as little as one euro per month. This helps to make it easier for investors to access the capital market and further democratise investing."
Christian Hecker, founder of Trade Republic, says: "The majority of clients at Trade Republic have a long investment horizon, which is reflected in the fact that over 80 percent of our clients have a savings plan. We also see a very high popularity among clients in the under-30 age bracket."
Erik Podzuweit, Founder & Co-CEO of Scalable Capital, adds: "ETF savings plans have been core to our offering for five years. Whether through broker or asset management, every second customer saves for their portfolio on a monthly basis. With an average savings rate of EUR450, customers make a significant contribution to their private retirement planning. Sustainable products in particular are becoming increasingly popular. It is becoming apparent that the classic savings book has had its day."
Thomas Dwornitzak, Head of Savings & Investments at ING Germany, says: "We have seen a great demand from our clients for securities savings plans for years. ETF savings plans in particular are becoming increasingly popular. In 2020, we achieved growth of over 90 per cent with more than 320,000 ETF savings plans. By lowering the savings rate to 1 euro for all our securities savings plans, as well as offering more than 800 ETF savings plans with no purchase fees from 1 April, we are making investing in securities just as easy as regular savings in a overnight deposit account."
Frank Niehage, CEO of flatexDEGIRO AG, says: "Long-term wealth creation through savings plans is absolutely essential for your retirement planning and we are convinced that everyone deserves returns, regardless of previous knowledge and time available. At flatex, we enable all our clients to execute their investment decisions in an uncomplicated manner on one of the most professional and secure platforms. In line with this, we now also offer the largest ETF and fund savings plan range in Germany with over 3,000 products permanently at 0 euros trading fees."
ETFs track the performance of stock market indices such as the DAX. They are particularly suitable for benefiting from the development on different markets and at the same time diversifying the risk of the investment. Due to their low ongoing costs, investing money in ETFs is also often more affordable than with conventional investment funds or a direct investment in the underlying securities.