While the number of assets under management, products, and issuers in the European ETF industry is growing, some market participants may ask themselves whether there is something such as “peak ETF?” This would be the highest number of ETFs and/or issuers which the European ETF industry can handle before it is saturated and starts to decline.
I don’t believe that such a number exists. Even if it does, I am pretty sure that we are currently far away from any kind of market saturation. The current market and industry environment does rather look the opposite, since the estimated net flows in ETFs in Europe are rising, while the number of issuers and new ETFs is going up.
That said, there is obviously only a limited connection between rising estimated net flows into ETFs and rising numbers of issuers and ETFs, since the new products are not the major beneficiaries of the strong inflows. Don’t get me wrong—some of the new ETFs witness quite strong inflows, but this is not a large number of products and they are not the driver of the main trend toward ETFs.
The fund flows in the European ETF industry are quite concentrated at the promoter and classification level, with the vast majority of inflows going into plain vanilla passive ETFs. This means the new issuers of actively managed ETFs are getting “only” a small share of the increasing estimated net flows into ETFs in Europe. Nevertheless, the flow numbers clearly show that the market share of the overall inflows into ETFs is increasing for actively managed ETFs. This means there is a real demand for these products and literally no signs of market saturation (Please see the respective chapter of the LSEG Lipper ETF Yearbook 2026 for more information on this topic).
That said, even as we don’t see any evidence for market saturation in the European ETF industry, it is to be expected that the “Zombie Tail,” the number of ETF issuers which are not profitable, in the European ETF industry will grow over time. But this is part of the game, as for various reasons, not all new ETF issuers will become successful.
The views expressed are the views of the author, not necessarily those of LSEG.
This article is for information purposes only and does not constitute any investment advice.
