Europe’s active ETF market is gaining momentum, with strong investor demand spurring fund launches and driving asset growth. Looking forward, we expect this trend to accelerate as investors embrace an evolving range of use cases.

Key Takeaways 

1 Accelerating Growth 
The expansion of Europe’s active ETFs is accelerating, powered by rising investor demand. Assets under management have increased nearly sevenfold since 2019 to €68.6 billion, and the number of funds and providers has followed a similar trajectory, with launches of active ETFs outpacing passive launches for the first time.

2 Expanding Use Cases 
European investors have tended to use active ETFs as building blocks in a buy-and-hold allocation. Looking forward, we expect their use of active ETFs to evolve. We see growth potential for solutions-oriented ETFs such as derivative-income and buffer funds. We also expect increased use of active ETFs to access new asset classes and harder-to-reach corners of the market.

3 Evolving Regional Nuances 
The two-sided market structure that underpins all ETF trading functions efficiently in Europe, just as it does in the US and other markets. Yet investors should be aware of regional nuances arising from the complexity of the European securities market. These include the regulatory landscape, with EU policy makers pursuing consolidation of the bloc’s capital markets and national regulators continuing to fine-tune the rules.

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