Active ETFs in Europe poised for growth amid evolving regulations  

Demand from institutional investors for ETFs continues to increase. Investors now view the vehicle as a core holding. Our research – and conversations with clients – indicate that more managers are entering the space, opening new distribution channels and delivering more choice. 

The growth rate of the European active ETF sector is accelerating, powered by changing regulations, investor demand, more products, and well-established managers entering the sector. 

In 2022, active ETFs in Europe made up 3% of ETF flows accounting for 1.5% of AUM. In 2023, the figures had grown to 5% and 1.8% respectively. The UCITS eligible assets directive, issued by the European Securities and Markets Authority (ESMA) in May 2024, is likely to support future growth of the active ETF sector. 

Overall, actively managed strategies are playing a bigger role in the ETF market. During the first half of 2024, they attracted 25% of flows and achieved a 20% organic growth rate. In the same period, assets grew from $714 billion to a record $889 billion. (3). We are also seeing household names such as Robeco, iShares, Eurizon Capital and ARK Invest amongst others launching active ETFs in Europe or planning to do so. (2)   

Institutional investors and wealth managers consider ETFs as a core holding – and plan to build allocations accordingly. Carne research indicates 84% expect to have a 5% or greater allocation to ETFs within three years. Some 32% expect to have more than 7%. (1) 

Furthermore, around half of institutional investors expect the global ETF sector to be worth $14 trillion or more within four years compared to $10 trillion in June 2023. (6) 

Our institutional investor clients (5), say ETFs offer them hard-to-access asset classes, lower charges, the ability to focus on a specific portion of an asset class and they also like the sector’s innovation. 

Carne’s expertise continues to offer valuable support to managers and their clients as they embrace the growing active ETF space. 

If you would like to learn more or discuss how Carne can help you enter or grow your active ETF offering, please contact Patrick O’ Brien. 

About the research

(1) Carne Group commissioned the market research company Pureprofile to interview 201 investors working for pension funds, family offices, wealth managers, insurance asset managers and consultants to institutional investors and asset managers in the UK, Germany, Switzerland, Italy, France, the Netherlands, Norway, Finland and Denmark with a total of $1.7 trillion assets under management.

The survey was conducted in December 2023 and January 2024.

(2) Active ETFs in Europe: Small, Shy and on the Rise (Morningstar, April 2024)

(3) Global ETF Flows First Half of 2024 (Morningstar, June 2024)

(4) State Street: New paths to Growth, Global ETF Outlook 2024

(5) Carne Group commissioned the market research company Pureprofile to interview 50 senior executives working for equity and fixed income fund managers in the UK, US, Germany, Switzerland, Italy, France, the Netherlands, Norway, Finland and Denmark.

Those interviewed included COOs, CFOs CROs, Heads of Product, Heads of Compliance, Head of Legal and senior fund managers.

The survey was conducted in December 2023 and January 2024.

(6) LSEG Lipper (August 2023)

About Carne

Founded in 2004, Carne Group is an international company that has established itself as Europe’s leading third-party management company and trusted partner to the fund management industry

Carne works with more than 650 clients – from boutique fund managers to global institutional investors – supporting funds distributed in over 160 countries and overseeing more than $2 trillion assets under management. Carne employs more than 600 employees worldwide.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

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