Top five trends in exchange-traded funds in Europe for 2026

ETFs are gaining in popularity

ETFs have become increasingly popular among investors, and for good reason. They combine many attractive elements: ease of use, relatively low costs, transparency for investors, and portfolio diversification. They also allow portfolio managers to tailor strategies so that they can meet ad-hoc demand for specific sector or country allocations as financial markets develop and economies and businesses evolve.

According to recent ETF Book.com data, ETF inflows surged to €325 billion in Europe in 2025, breaking the 2024 record. This increase illustrates the persistent appeal of ETFs among investors. More broadly, global assets under management (AUM) in ETFs rose from $1.3 trillion in 2010 to $19.6 trillion at the end of 2025.

All types of investors are driving the market’s growth. They are using ETFs more and more as a way to diversify portfolios and access a broad range of asset classes. Financial advisors are recommending ETFs increasingly to clients for the same reasons. 

Active ETFs on the rise

The market for passive ETFs has become overcrowded, leading players to expand into the active ETF segment.

Also known as index ETFs, passive ETFs seek to replicate the performance of a specific market index such as the MSCI Europe. These ETFs typically hold a representative sample of the securities constituting the index in the same proportion as the index itself. By tracking a broad index, investors can reduce the risk associated with individual stocks or sectors.

Passive ETFs disclose their holdings daily, allowing investors to see exactly what they own. While they typically have lower turnover rates and aim to deliver consistent returns, the goal of mirroring the performance of the underlying index means they just match (the performance of) the market index rather than beating it.

Active ETFs, by contrast, are run by a manager who actively selects securities and makes portfolio decisions to achieve a specific return. As a result, they can outperform rather than match the market index. Actively managing risk means the manager can adjust the portfolio to mitigate potential losses. This does come at a price: Active ETFs are generally more expensive than passive ETFs, with higher management charges and operating costs.

The steady stream of new active ETFs that marked 2025 looks likely to continue, with more options and strategies to choose from. Last year, over 130 new active ETFs were launched by a growing number of asset managers. 

Emerging demand for white label ETFs

White label ETFs are gaining traction, particularly in Discretionary Portfolio Management (DPM), but also among asset managers and financial institutions. These ETFs are created and managed by a third-party provider, but branded and distributed by another company, typically a wealth manager or other financial institution. The third-party provider manages, operates, and administers the ETF, while the distributor markets and sells the product.

By partnering with a third-party provider, distributors can avoid the costs of creating and managing their own ETFs, and focus on their core business. Tapping into the expertise and resources of a third-party provider can also enhance the overall quality of the ETF and provide distributors with a competitive edge in the market.

White-labelling allows for ETFs to be customised to meet the needs of the distributor and their clients. They can be adapted easily to changing market conditions and investor demands, allowing for a quick response to new opportunities and challenges.

Demand for white label ETFs is being driven by the increasing popularity of ETFs among investors and the need for distributors to set themselves apart in a crowded market. According to a recent survey, 40% of wealth managers and asset managers are considering launching their own white label ETFs in the next two years, driven by the desire for cost-efficient and customisable investment solutions. 

Retail investors and online platforms drive growth

Traditionally, ETFs were the domain of professional investors. Now, more and more retail investors, platforms, and saving plans are taking part.

In Germany, for example, ETF savings plans have seen a notable rise in popularity among private investors in recent years. A recent survey found that 51% of adults were interested in such plans, with 18 to 34-year-olds accounting for two-thirds of that percentage.¹

Online platforms, robo-advisors, online brokerages, and investment apps are driving growth, with many retail investors using digital platforms for research and to invest. Platforms have made investing easier: Fees are often lower than those charged by traditional financial institutions; user-friendly interfaces facilitate search, selection, and purchases; digital applications are available 24/7; and platforms often provide educational resources and market analysis to help investors make informed decisions.

It is no surprise then that many investors are turning to platforms to access and invest in ETFs. The online platform business is highly competitive, with many key players offering benefits including low costs and accessibility. As the ETF market continues to grow, it is likely that platforms will play an increasingly important role in shaping the industry. 

ESG investing remains a key focus

Environmental, social, and governance investing has become a significant trend, and ETFs have emerged as a popular vehicle for ESG investing. This offers several benefits. They include Improved risk management: By considering ESG factors, investors can identify potential risks and opportunities that traditional financial analysis may not capture. Furthermore, ESG ETFs provide investors with transparency into the ESG practices of the companies they invest in and allow investors to align their investments and their values and promote sustainable development.

The range of ESG ETFs is expanding, with products being launched that offer different levels of ESG integration from ‘light green’ to ‘dark green’ to cater to different investor needs and preferences. At the same time, the quality and availability of ESG data are improving, enabling investors to make more informed decisions. Regulatory bodies are increasingly supporting ESG investing with initiatives aimed at promoting sustainable finance.

There are also challenges and limitations: they include the lack of a standardised approach to ESG investing, which can make it difficult for investors to compare ESG ETFs, and greenwashing, which can blur the lines between genuine ESG efforts and marketing campaigns. 

Conclusion

Overall, though, growth in ESG investing and the other four trends mentioned above suggests that the ETF approach is becoming increasingly popular and mainstream, and that more innovation and development is to come.

Over the next few decades, there looks to be a sizeable opportunity for ETFs to gain market share relative to other, more traditional investment vehicles, not least as younger investors with cash looking for an attractive and low-cost return come onto the market. Trillions of dollars of wealth are set to be transferred from the Baby Boom generation to younger owners with an appetite for modern, flexible and platform-ready investment products: ETFs.