ETFs go from strength to strength in Europe

Of the $14.85 trillion managed by ETFs globally, Europe accounts for $2.27 trillion¹, a share that many people expect will increase over time. Andrea Murray, European Business Development Manager for ETFs, BBH, referenced that ETFs in Europe are expected to see 15% annual growth over the next five years, pushing the market past $4.5 trillion in Assets Under Management (AuM) by 2030.²

AuM is expanding for several reasons, although recently much attention has been given to asset managers launching active ETFs, as they look to expand their European distribution efforts. This comes as ETF issuers seek to target Europe’s sleeping giant – a vastly under-tapped retail investor segment, continued Murray. Historically, European households parked most of their financial savings in cash deposits and real estate, but this is slowly starting to change, as new platform technology and ETF Savings Plans make investing easier and more accessible.

Mastering the art of distribution in Europe

European retail investors may be an enticing target market for ETFs, but issuers need to think very carefully about their marketing and distribution campaigns before taking the plunge.  

So, what does this mean in practice?  It comes down to differentiation and a digital marketing strategy.

"In terms of differentiation, having great products is essential, but today's clients also expect an extra level of service. At J.P. Morgan Asset Management, clients benefit from offerings like our Market Insights, Guide to ETFs, Long-term Capital Market Assumptions, and in-depth educational sessions or training programs," said Tom Stephens, Global Co-Head of Capital Markets.

When it comes to digital marketing strategy, “Issuers must have a digital first strategy, so that investors and prospects can get engaging information easily and in a language they understand, whether this is via an ETF issuer website, social media or online trading platforms,” said Isabell Moessler, Founder, CEO, IMC Consult.

Digital marketing of this sort will be essential if issuers want to target younger, more tech-savvy investors. “Some Issuers have yet to embrace these digital channels, but it is all about meeting customers where they are, and identifying where they are consuming their information. I have even seen some issuers use ‘Finfluencers’ to get their messages across so it’s important for ETF marketing and distribution teams to have an open mind,” said Moessler. 

Institutional clients are also a key target market for ETF issuers. “We have noticed a wave of institutional interest in ETPs emerging into 2025. Firstly, by asset managers that so far haven’t launched via the ETP wrapper and are evaluating their options, be it defining how different product strategies would sit within their range or what their most suitable go to market route would be. Additionally, fund buyers continue to recognize the threat and opportunity that ETPs provide. Be it incorporating ETPs into their retail strategy or within their broader portfolios, there is rarely a client conversation that doesn’t include ETPs”, commented Patrick Mattar, Global Head of ETP Distribution, Allfunds.

Boots on the ground

However, experts need to remind North American ETF issuers that Europe is not a homogenized market with a shared language or culture, but one that is full of idiosyncrasies and fragmented investment cultures. Having a local presence on the ground will be essential if managers are to win over local investors, said Murray.

Keeping ETF sales teams motivated is also a must if firms are to grow their AuM. Unlike mutual fund sales which are easy to quantify, ETF sales tend to be more opaque. Speakers highlighted this will require firms, especially traditional asset managers, who may have recently launched ETF product lines, to design new compensation metrics (e.g. based on the number of introductory meetings held with prospects, etc.), so that sales teams are rewarded properly and fairly for their efforts.

Finally, and an equally critical piece of the puzzle, capital raising success is contingent on having robust service provider support. “One of the most important decisions for ETF issuers is choosing the right external partners such as market makers, the right stock exchange listings, legal counsel, ManCo, and a service provider. These are all key determinants for success when launching ETFs for the first time” said Stephens.

Conclusion

It’s clear that the right distribution, capital markets, and launch strategy will continue to dominate ETF conversations in Europe and even other key markets like the US, Asia, and Latin America.