European asset management remains in the midst of a fundamental structural transformation, with traditional fund managers increasingly committing resources to the active exchange-traded fund space. Royal London Asset Management, managing approximately £184 billion in assets, has announced plans to open an office in Dublin within eighteen months in direct support of a comprehensive European expansion strategy that prioritises entry into the active ETF market.
M&G Investments, another prominent British asset management organisation, has accelerated its timeline for active ETF deployment. The firm plans to unveil its initial active ETF offerings within a matter of weeks following the announcement, focusing initially upon products providing exposure to United Kingdom government bonds and United States Treasury securities. Both organisations have explicitly referenced the operational advantages of the ETF structure relative to traditional mutual fund vehicles, emphasising the superior tax efficiency, operational simplicity, and international distribution capabilities afforded by the exchange-traded fund wrapper.
The competitive landscape has expanded substantially in recent months as other large asset managers have entered the market. Schroders unveiled its inaugural active ETF products in Europe during the preceding month, concentrating initial product launches upon global equity exposures and high-quality corporate bond strategies. Jupiter, a smaller British asset management firm, initiated its active ETF programme at the commencement of the current year with the launch of a global government bond-focused product.
European Active ETF Markets Have Experienced Rapid Expansion
The underlying market dynamics driving this wave of traditional manager entry reveal substantial growth in both absolute assets and relative market share. Assets under management within Europe’s active ETF sector have grown at an approximate 40% annual rate over the preceding five years, with net inflows to active ETFs accounting for nearly 7% of total ETF flows in the first seven months of 2025, compared with just over 1% in 2020. European active UCITS ETFs experienced €16.3 billion in net inflows during 2024 and achieved total assets under management of €49 billion by the year’s end, representing an 80% increase from the prior year and a cumulative 385% increase across the preceding five-year period.
The relative penetration of active ETFs within total ETF markets remains substantially below levels observed in the United States, creating material room for continued expansion. Active UCITS ETFs represented only 2.4% of total UCITS ETF assets at the end of 2024, nearly doubling from the 1.3% proportion recorded at year-end 2019. By contrast, active ETF products constitute 8.4% of the total United States ETF market and achieved net assets of €867 billion at the end of 2024.
Regulatory developments have substantially accelerated market entry decisions among traditional fund providers. Luxembourg has removed subscription taxes and daily transparency requirements from active ETFs, whilst Ireland has approved mutual fund ETF share classes and amended naming rules to accommodate these products. These regulatory modifications have materially reduced the structural impediments to launching active ETF products within the most significant European fund domiciles. In the first ten months of 2024, the United States witnessed 482 new active ETF launches compared with 144 indexed ETF launches, establishing active funds as the primary source of innovation within the sector.
Fee Compression and Asset Consolidation Have Created Structural Profitability Pressures
The migration of assets toward active ETF structures reflects both investor preference for operational efficiency and fundamental deterioration in the economics of traditional mutual fund distribution. The traditional mutual fund structure involves daily pricing of securities at precise net asset valuations, with trading restricted to purchase and redemption at single daily prices. The active ETF structure permits intraday trading on regulated exchanges at market-determined prices whilst preserving the capacity of portfolio managers to employ discretionary investment strategies designed to outperform designated benchmark indices.
The financial economics of these competing distribution mechanisms differ substantially. ETF structures generally permit significantly lower operational costs relative to traditional mutual fund equivalents serving comparable investment objectives. The combination of lower costs and superior accessibility through exchange trading has created a powerful economic incentive for both fund managers and investors to transition capital away from traditional mutual funds toward the ETF wrapper.
The entry of leading asset managers into the active ETF space represents a strategic response to these economic pressures. By converting existing mutual fund investment strategies into active ETF products, organisations can extend the lifespan of profitable investment processes whilst accommodating evolving investor preferences. Among mid-tier asset management firms, interest in entering the ETF market appears particularly pronounced, as many organisations confront growing profitability pressures and possess little or no existing ETF operational experience.
Growth Projections for European Active ETF Sectors Suggest Material Expansion Potential
Market forecasting organisations have articulated substantially elevated projections for active ETF growth across the following decade. Worldwide, total ETF assets under management are expected to reach US$25 trillion by 2030, with expansion driven by product innovation, technology-driven improvements in efficiency and distribution, growing investor adoption, and expansion into new geographic markets. European ETF assets are expected to reach US$4.5 trillion by 2030, powered by accelerating retail adoption.
More specifically focused estimates addressing active ETF expansion have proven even more ambitious. Industry participants expect active ETF assets in Europe, which were at US$54 billion at the end of 2024, to surpass US$100 billion in 2025 as increased supply meets growing investor demand. Long-term projections suggest that European-domiciled actively managed ETFs will grow to US$1 trillion by 2030.
This projected expansion has attracted attention from investors across multiple geographic regions and investor categories. The investor base for European active ETFs is expanding, with Asian investors increasingly joining those in Europe to help drive market growth, with both regions using these funds as core building blocks in buy-and-hold allocations.
Cryptocurrency ETF Developments Parallel Broader Active ETF Expansion
The European market for cryptocurrency-related exchange-traded products has expanded simultaneously with the broader active ETF growth trajectory, creating an interesting comparative case study regarding investor adoption of emerging asset classes through ETF wrappers. The European market for cryptocurrency ETPs comprised over 160 products tracking the price of Bitcoin, Ethereum, and other tokens, with total assets of US$17.3 billion, substantially smaller than the comparable United States market.
Traditional asset managers have begun entering the cryptocurrency ETF space as the regulatory environment for such products has become progressively more permissive. BlackRock launched its iShares Bitcoin ETP on European exchanges on March 25, 2025, trading on Xetra, Euronext Amsterdam and Euronext Paris, with the product launching at a temporary 10 basis point fee waiver reducing the expense ratio to 0.15% until the end of 2025. A survey conducted by BlackRock in partnership with Focal Data found that 75% of professional investors would be interested in a Bitcoin ETP within the next two years, with approximately 25 million cryptocurrency investors already distributed across European markets.
