As investor demand for exchange traded funds (ETFs) across Europe continues to grow – thanks to products’ transparency and liquidity opportunities – assets in active ETFs across the region have doubled in the past two years.
Matteo Andreetto
Of course, this still lags behind volumes in the US, but fixed income in particular is leading the way for the continued growth of ETFs across Europe.
Research from Morningstar found that by the end of August 2025, assets in active ETFs in Europe added up to €62.4 billion, marking 12% growth from the recorded €55.5 billion at the end of 2024.
For fixed income specifically, European ETFs have also seen growth in this market, with Morningstar’s research revealing that bond active ETF assets represent 24% (€14.8 billion) of the total active assets.
Speaking at a State Street roundtable on Tuesday, Frank Koudelka, global ETF product specialist at State Street, highlighted that Europe is around five years behind the US when looking at the current state of plays across the regions.
“About six or seven years ago, the US looked exactly like Europe from the number of issuers and the number of products in the AUM for active management. Now we’re at over a trillion in assets in the US and accelerating to the point where it’s close to 40% of the flows going to actively managed ETF strategies.
“I look at Europe as probably half a dozen years behind the US and now we’re starting to see that evolution where the same managers that put a shingle in the US and started to offer products are working with us to offer similar strategies in the European market, in the Australian market and some of the other global jurisdictions.”
Additionally, other experts speaking at the roundtable highlighted the increased interest in active ETFs from firms across Europe, noting that currently four out of five wealth managers in the region are already using active ETFs and 85% of them will increase allocation to active products.
This growing interest has been noted across the industry, and as referenced in a CACEIS report from July this year, JP Morgan predicts that European ETF assets will reach $6 trillion by the end of 2030.
Moreover, the growth of the ETF market in the region has also been reflected in developments, most recently with Euronext’s launch of the first fully integrated marketplace for exchange-traded funds (ETFs) and exchange-traded products (ETPs) across Europe.
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Despite the growth, these figures only account for 2.6% of the total assets invested in ETFs in Europe, in comparison to the US where this area is more prominent, making up 10.2% of total assets.
“The European active ETF market has doubled in size over the past two years, yet it still accounts for less than 3% of total ETF assets in Europe, with €62.4bn in assets as of August 2025,” said Mara Dobrescu, senior principal for fixed income strategy ratings at Morningstar.
“While the jury is still out on the performance of active ETFs versus their passive peers, initial data suggests they have better success rates than their open-end active counterparts. This indicates that ETFs, with their transparency and lower costs, are beginning to demonstrate their added value for investors. As such, their momentum in the European market is likely to continue.”
When delving into the main areas driving this growth, the report also pointed towards equity strategies as a significant driver, with €43.9 billion – 70% – of the total assets dominated by this asset class.
Fixed income as a core focus
As noted, fixed income has emerged as a key area of interest for many investors across Europe, as active ETFs begin to widen into new sectors of this market.
Specifically, active ETFs in Europe are breaking into collateralised loan obligations and mortgage-backed securities, and the sector is seeing a wider variety of options in corporate bonds, high yield, and emerging market debt, according to Morningstar.
Speaking on Tuesday, Matteo Andreetto, head of SPDR EMEA at State Street Investment Managers, pointed towards fixed income ETF products as an underserved segment in Europe where investors can generate alpha more consistently than large-cap equity, which is already well-established.
“An additional acceleration to the ETF market could potentially come or will come from active fixed income,” he affirmed.
“Active fixed income products are not necessarily particularly popular at the moment. But fixed income is where wealth managers expect to lean more heavily for active compared to passive, making sure that there is an element of outperformance in the building block that they put as part of their portfolios.”
The growth of the active ETF market in Europe has also seen new providers entering the scene, however Morningstar’s research revealed that JP Morgan leads the pack, commanding 56% of market share.
This is largely as a result of the firm’s suite of enhanced index research ETFs, and Fidelity follows as the second largest provider with 11.1% of market share. Pimco also holds 6.9% of the market share.
Despite this, the number of new entrants to the provider scene has increased every year since 2017, with a significant uptick in pace in 2024 and 2025.
These increases indicate that although the US’ active ETF market still prevails, Europe appears to be coming into its own, and active ETF assets are set to continue growing across the region over the next few months and years.