Investors Prepared to Increase Allocations in Active Exchange-Traded Funds
The active Exchange-Traded Fund (ETF) market in Europe is expected to experience strong growth in the next five years, with several sectors showing significant trends, according to the findings of HANetf's latest Thematic & Active Review.
### Overall Growth of Active ETFs in Europe
Active ETFs in Europe have grown rapidly, with assets under management (AUM) reaching €58 billion by Q1 2025. The growth is expected to continue at a slightly moderated but still strong compound annual growth rate (CAGR) of about 25%, potentially reaching €165 billion by 2029. Inflows into active ETFs rose from about $7 billion in 2023 to $20 billion in 2024, with the number of products increasing from 103 to 178, highlighting growing investor interest and product innovation.
### Fixed Income ETFs
Fixed income ETFs are a particularly dynamic segment. BlackRock projects that fixed income ETF assets in Europe could reach $6 trillion by 2030, indicating rapid expansion. Demand is strong for diversified bond exposures, including Euro government and corporate bonds, especially in light of changing relative attractiveness versus US Treasuries. Innovative strategies such as iBonds ETFs, which have gained over $8 billion in under 18 months, show investor appetite for fixed income products with tailored features. Fixed income ETFs have the potential to drive a substantial portion of overall ETF growth, with ambitions to double fixed income ETF assets in the EMEA region within the coming years.
### Covered Call and Thematic ETFs
While direct data on covered call ETFs were not extensively highlighted in the available reports, thematic and niche active ETFs are a significant growth driver. Thematic funds, including healthcare, are favoured by many emerging "greenfield" launches, accounting for about 82% of active ETF flows in 2024, indicating strong investor interest in specialized and thematic strategies. Active ETFs using systematic beta-plus approaches (akin to enhanced equity strategies) are increasingly popular, such as the Invesco Global Enhanced Equity UCITS ETF, which aims to outperform global equities with controlled risk, suggesting innovation in income and yield strategies like covered calls.
### Healthcare Sector ETFs
Healthcare-themed ETFs align with the broader thematic ETF trend and are expected to benefit from the thematic fund growth surge. The healthcare sector is commonly included in thematic ETF offerings appealing to retail and institutional investors, supported by demographic and technological changes driving long-term healthcare investments.
### Summary Table of Predicted Trends
| Sector | Key Growth Drivers and Predictions | |----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Fixed Income | Potential to reach $6 trillion by 2030; innovative products like iBonds gaining rapid traction; expected to double AUM in EMEA region by expanding bond market access[2][3]| | Covered Call | Growing interest in income strategies; emerging beta-plus and enhanced equity ETFs indicate potential growth in covered call applications[3] | | Thematic | Thematic ETFs represent 82% of active ETF flows in 2024; strong appetite for niche and specialized ETFs including technology, sustainability, and healthcare[4] | | Healthcare | Healthcare ETFs part of thematic growth trend; beneficiary of demographic shifts and innovation-driven investment themes[4] | | Overall Active ETFs | Strong CAGR ~25% expected through 2029; AUM to grow from €58B in 2025 to about €165B in 2029; inflows and product launches accelerating[1][4] |
### Conclusion
The active ETF market in Europe, particularly across fixed income, thematic, and healthcare sectors, is poised for substantial growth over the next five years, driven by increasing institutional and retail investor demand, product innovation, and diversification needs. Fixed income ETFs are expected to be the largest growth area, with covered call and thematic ETFs also gaining significant momentum as investors seek yield and specialized exposures. Hector McNeil, Co-Founder and Co-CEO of HANetf, stated that investor interest in active ETFs is still growing.
Investing in technology could be a promising approach for capitalizing on the growth of the active ETF market in Europe, as thematic ETFs, which often include technology as a sector, are predicted to continue experiencing a surge in investor interest. As innovations in fixed income ETFs, such as iBonds, prove successful, there may also be opportunities for investment in technology-focused fixed income products. Additionally, the healthcare sector, which is often part of thematic ETF offerings, is expected to benefit from the growth trends in active ETFs, potentially offering further avenues for technology investing within healthcare themes.
