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January 27, 2025

Monday Morning Memo: Did Actively Managed ETFs Meet the Expectations in Europe Over the Course of 2024?

by Detlef Glow.

A lot has been written about actively managed ETFs. Indeed, one could say that these products made headlines all year round as market observers expected that active ETFs will become the next big thing in the European ETF industry. For me this means one should take a look at the fund flows and assets under management to see if the growth of these products could keep up with the high expectations raised by all the headlines.

First of all, it needs to be made clear that the segment of active ETFs is quite small since these products held only €56.2 bn in assets under management as of December 31, 2024. This means active ETFs account for only 2.70% of the overall assets under management in the European ETF industry.

A view of the overall estimated net flows for actively managed ETFs shows that these products had estimated net inflows in each month of 2024. That said, a more detailed view of the fund flows shows that “real” active ETFs (ETFs which are managed unconstrained by a benchmark) faced outflows in January (-€0.3 bn), February (-€0.5 bn), and March (-€0.5 bn), while so-called semi-active ETFs (active managed ETFs where the decisions of the manager are constrained by a benchmark) enjoyed inflows for every month of the year 2024 (-€0.06 bn).

 

Graph 1: Monthly Estimated Net Flows in Active Managed ETFs by Management Approach (in bn EUR)

Fund Flows of actively managed ETFs by Management Approach

Source: LSEG Lipper

 

Admittedly, these are small numbers, but outflows in an environment in which the overall ETF industry enjoyed healthy inflows do speak their own language. That said, the overall estimated net flows for active ETFs (+€2.3 bn) and semi-active ETFs (+€16.3 bn) for 2024 were positive. Nevertheless, these estimated inflows may not have met the expectations of market observers and ETF promoters, especially if one compares these flows with the estimated net flows for passive ETFs (+€224.9 bn) over the course of 2024. In addition,  these numbers show that European investors have preferred semi-active ETFs over the course of 2024.

The fact that some ETF promoters in Europe might be disappointed by their sales numbers becomes even clearer when one analyzes the flows in actively managed ETFs at the promoter level. As the chart below depicts, the flows in all kinds of active ETFs were massively concentrated as JPMorgan—the best-selling ETF promoter in this segment—enjoyed estimated net inflows of €13.2 bn, which equals 71.35% of the overall flows in the segment of actively managed ETFs. These numbers are far ahead of Amundi ETF, the second best-selling promoter of active ETFs in Europe, which gathered estimated net inflows of €1.4 bn. In contrast with JPMorgan, which enjoyed inflows in long-term products, Amundi ETF’s flows were driven by its actively managed money market products.

 

Graph 2: Estimated Net Flows in Active Managed ETFs by Promoter for 2024 (in bn EUR)

2024 Fund Flows of actively managed ETFs by Promoter

Source: LSEG Lipper

 

These flow numbers underpin that there is a strong competition when it comes to actively managed ETFs in Europe and currently is the winner taking it all.

In other words, the European ETF market has low barriers for entry, but high barriers to become successful.

With regard to the analysis above, it can be said that the segment of actively managed ETFs is still in its infancy, and only the next few years will tell if these products will be a success story in the European ETF industry. From my point of view, active ETFs will become one of the main growth drivers in the European ETF industry, but as I don’t have a crystal ball to see into the future, I might be wrong with this assumption.

 

This article is for information purposes only and does not constitute any investment advice.

The views expressed are the views of the author, not necessarily those of LSEG Lipper or LSEG.

 

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