Assets in European active ETFs have reached EUR 62.4 billion, which is more than double their level from two years earlier.
That’s impressive growth, but the segment still represents just 2.6% of Europe’s total ETF assets, well behind the 10.2% share in the United States. This gap underscores the early stage of adoption in Europe.
Investor appetite for active ETFs is increasing, even if adoption is still in its early stages. Between January and August 2025 alone, investors poured EUR 13.4 billion into active ETFs, building on EUR 18.4 billion of inflows in 2024. But while flows are encouraging, they represent only 6% of total ETF inflows in Europe, compared with a striking 36% in the US.
As Competition Rises, JP Morgan Still Leads
JP Morgan remains the dominant player in Europe’s active ETF market, commanding a 56% market share, mainly thanks to its popular Research Enhanced Index (REI) range. Fidelity (11%) and Pimco (7%) follow, while new entrants such as HSBC, Avantis, Robeco, and Goldman Sachs are making their presence felt.
Fees have also become more competitive. The average equity active ETF fee now stands at 0.37%, significantly lower than the 1.32% average for active mutual funds, though still above passive ETFs, which average 0.27%. In fixed income, active ETFs charge roughly 0.30%, again undercutting active mutual funds while maintaining a modest premium over index trackers.
Launch Momentum Builds
After years of limited activity, 2024 and 2025 saw 60 and 81 new active ETFs introduced, respectively. Fund closures have so far been rare, though that likely reflects the segment’s relatively short track record rather than firm evidence of long-term commitment. As the market matures, it remains to be seen which products will prove sustainable once performance and investor demand are tested over time.
Systematic Strategies Are Gaining Ground
The rapid proliferation of active ETFs has made it increasingly difficult for investors to distinguish between products. To address this, Morningstar analysts have introduced a new classification framework that sheds light on how managers are running their active ETFs.
The framework distinguishes between discretionary strategies, where portfolio managers make judgment calls on security selection and allocation, and systematic ones that follow rules-based quantitative models.
Around 86% of active ETF assets in Europe follow discretionary strategies, driven largely by JP Morgan’s dominance, as of August 31. Yet the picture is starting to shift. Inflows into systematic active ETFs have surged threefold this year to EUR 3.5 billion, suggesting that investors are warming to more model-driven approaches. Providers such as Avantis, iShares, and HSBC have launched “quant”-focused products.
Equity ETFs: Shy-Active Rules
Most active equity ETFs in Europe are what Morningstar calls “shy-active”—benchmark-aware, low-tracking-error strategies designed to deliver small incremental gains over index funds. These products are used as core building blocks within portfolios. JP Morgan’s and Fidelity’s Research Enhanced ranges exemplify this trend, balancing modest active risk with competitive costs.
High-conviction funds remain rare but are beginning to make inroads. Janus Henderson, for instance, has launched concentrated best-ideas portfolios under its new Pan European High Conviction ETF, while iShares’ AI Innovation ETF targets companies driving artificial intelligence adoption. Fidelity has also introduced Europe’s first semi-transparent active ETF, allowing managers to protect proprietary insights while providing sufficient visibility for investors.
Fixed-Income ETFs: Quiet Achievers
Active ETFs are also venturing into new territory in the bond market. Managers have recently launched products targeting collateralized loan obligations (CLOs) and mortgage-backed securities, asset classes once considered too complex for ETFs. Janus Henderson, Invesco, and iShares now offer actively managed CLO ETFs, while Janus Henderson’s new mortgage-backed securities ETF is the first of its kind in Europe.
In fixed income, the discretionary approach still reigns supreme. Most bond ETFs rely on fundamental, manager-driven analysis rather than quantitative models. They also tend to stay within tight risk bands. Tracking errors below 1% are common, reflecting investors’ preference for benchmark-aware exposures.
Early performance data is promising. Active fixed-income ETFs have delivered higher success rates than both passive peers and traditional active mutual funds, thanks in part to lower fees and the inherent inefficiencies of bond markets.
The Bottom Line: Active ETFs Are Growing Up
Europe’s active ETF market is evolving fast. What began as a niche segment dominated by benchmark-aware strategies is now expanding into new asset classes, styles, and levels of conviction. Costs are coming down, competition is heating up, and innovation—from semi-transparent structures to systematic quant models—is accelerating.
For investors, that means more choice, but also more complexity. Understanding whether an ETF is truly active, how much risk it takes, and how it fits within a portfolio will be key. Active ETFs in Europe are “stepping out of their comfort zone” and that could make them one of the most interesting corners of the investment landscape in the years ahead.
