The growth pushed global industry assets under management past £3.5trillion for the first time, according to iShares.

ETF provider iShares and Index Investments at BlackRock said the shift to fee-based wealth management in the US and Europe was encouraging the use of low-cost portfolio funds. Investors were seeking core foundations funds and fund exposure to access markets, bringing in net inflows of £149bn.

Institutions increased their use of iShares across asset classes and in tactical and buy-and-hold portfolios with iShares organic growth rising to 19% (£182 billion) over 2016’s 13% (£104 billion), said BlackRock.

Mark Wiedman, global head of iShares and Index Investments at BlackRock, said: “We project the global ETF market to more than double in assets under management by 2022.  Three global trends should power this growth:  fee-based wealth management, networked bond and derivatives trading, and alpha-seeking usage by active fund and wealth managers.” 

Stephen Cohen, head of iShares EMEA at BlackRock, said:“As the impact of MiFID II rules resound across the region we believe the European ETF industry is set for a new phase of growth. 

“In 2017, we stayed laser focused on providing investors with greater investment flexibility by building a suite of 35 income treatment and currency-hedged share classes, launching market firsts such as the physical-replicating Global Aggregate bond fund and helping clients tap into economic development stories using the likes of our Robotics ETF.”

iShares AUM closed the year at £1.2 trillion, including £96 billion in equities and £427 billion in fixed income and commodities.