Active ETFs Gaining Momentum in Europe, Now Available for Private Investors
Democratizing Investment with Xtrackers
Financial firm DWS Xtrackers releases actively managed Exchange-Traded Funds exhibit notable outperformance compared to their peers in the market.
In Frankfurt, Simon Klein, Global Head of Sales at DWS, shared with the press an exciting update on the growth of active ETF markets in Europe. He highlighted the booming demand for flexible and actively managed investment solutions, especially among institutional investors. However, it's not just the institutions reaping the benefits anymore—three new ETFs are now open to private investors, bringing a genuine democratization to the investment world.
Europ's robust appetite for active ETFs
Europe's hunger for active ETFs is robust and multi-layered. For traditional institutional investors, the allure lies in diversification benefits and the intricate array of investment strategies available. On the other hand, retail investors, spurred by the emergence of digital platforms and retail brokerages, are playing an increasingly crucial role in market growth.
The European ETF market witnessed a remarkable growth spurt in 2024, with a record $270 billion in net inflows. By 2024, active ETFs had attracted a staggering $20 billion, demonstrating a strong and steadily growing desire for these investment products. This trend isn't exclusive to Europe; it's shown similar patterns in the U.S. due to advantages such as intraday liquidity and potential tax benefits.
Product diversity and innovation fuel demand
The European active ETF landscape is rich and evolving, encompassing a wide range of strategies including equity, fixed income, thematic, and enhanced index ETFs. This diversity resonates with both seasoned active managers and new investors seeking tailored investment solutions. Furthermore, the active ETF market in Europe saw the launch of 75 new products in 2024, signaling a robust demand and supply dynamic.
In the year ahead, expect the growth momentum to persist, according to State Street's predictions, with active ETFs continuing to represent a significant share of new products hitting the European market. It's also expected that retail investors will gain increasing importance, particularly in Switzerland, where they can enjoy the benefits of ETF savings plans offered by banks and financial services providers. Altogether, the demand for active ETFs in Europe is strong, fueled by diversification, product innovation, and increased accessibility.
As the European active ETF market continues to expand, technology plays a crucial role in attracting retail investors. The emergence of digital platforms and retail brokerages allows individuals to invest in actively managed ETFs, thereby democratizing finance and providing opportunities for intelligent technology-driven investing.
Product diversity and innovation further fuel demand, as the array of active ETF strategies—ranging from equity to thematic offerings—caters to various investor preferences and sophisticated investment requirements, thereby positioning technology at the forefront of the investment landscape.
