Europe’s exchange-traded fund market is expanding rapidly, with BlackRock’s Brett Pybus stating the growth has only begun.
Pybus, co-head of iShares Europe at BlackRock, calls the industry’s trajectory an “acceleration path.” Record net inflows marked 2025, with that momentum continuing into January and February. March brought volatility, and with it some flow instability, which he considers part of the nature of ETFs. By April, activity had recovered.
More than just money moving in
The change extends beyond raw numbers. Investors are using ETFs in new ways. A single product can serve a German saver making small monthly contributions, an asset manager adjusting market exposure, or an institution seeking quick access to fixed income. This adaptability is fueling broader adoption across Europe.
Two developments lead the shift. Digital investment platforms, particularly in Germany, have popularized ETF savings plans among individual investors. The approach is now spreading to France, the Nordics, Italy, and the UK, a market that has lagged in retail ETF use.
Fee-based wealth management is also expanding. BlackRock’s data shows discretionary portfolio management and similar channels now hold 47% of assets under management, up from 36% five years ago. By 2028, that share may reach 55%.
Wealth managers are not just replacing expensive funds with cheaper trackers. They are using ETFs more strategically, combining broad exposures like the MSCI World or S&P 500 with targeted sectors and thematic funds. BlackRock refers to these as “precision exposures,” allowing portfolio managers to adjust risk without buying individual securities.
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The UK’s slow start
The UK, despite its deep financial markets, has been one of Europe’s weaker ETF markets. Pybus attributes this partly to legacy platform business models and partly to plumbing. In particular, he points to the lack of fractional dealing and the cost of regular small trades. “If the trading costs are high, then it makes it expensive to invest a small amount regularly,” he says. “Therefore you’ll use a mutual fund or another proposition, which is just sensible.”
That is beginning to change as platforms modernise.
Fixed income finds its footing
When Pybus joined BlackRock in 2013, fixed income ETFs were still a niche product. His background in active bond investing helped demonstrate that ETFs were practical tools, not just fund alternatives.
The Covid market shock proved key. Fixed income ETFs provided liquidity and price discovery when parts of the bond market became difficult to value. That experience drove institutional adoption. Today, asset managers use bond ETFs to equitize cash, gain exposure to high yield or collateralized loan obligations, and manage duration and credit views.
For retail investors, the benefits are straightforward. “Buying individual bonds is really hard and really expensive,” Pybus explains. ETFs offer a diversified alternative without the complexity.
Despite recent growth, fixed income ETFs still account for only about 2-3% of the cash bond market, compared with 10-11% for equity ETFs. The difference suggests significant room for expansion.
Active ETFs and the future of the wrapper
ETFs were long associated with passive investing, but that perception is shifting. BlackRock has raised $7-8 billion in its European active ETF lineup, with these products representing about 10% of inflows last year. Some employ systematic strategies to seek incremental returns over an index, while others are more fundamental, including an AI-focused equity fund.
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The US is further ahead, with ETFs increasingly treated as the default fund structure. Europe is still catching up, but the trend is clear. “Demand is growing relatively strongly,” Pybus states.
He does not expect active ETFs to surpass trackers. Index investing in Europe still has room to grow—the average wealth portfolio holds about 20% in index products, compared with 50% in the US. Fixed income adoption remains even lower.
Innovation, but with limits
Not every ETF serves as a core portfolio building block. BlackRock’s European Bitcoin ETF, which gathered over $1 billion in its first year, serves as a “bridge” for investors seeking crypto exposure within a regulated framework.
Other recent launches include a defense ETF and geographic revenue products, which separate a company’s listing location from its revenue sources. The FTSE, for example, may be a UK benchmark, but much of its revenue comes from overseas.
Pybus cautions against overemphasizing innovation. “A billion dollars in a Bitcoin ETF is impressive,” he says. “But most customers are still buying S&P 500, MSCI ACWI, or MSCI World, or building solid portfolios.”
The broader challenge is shifting Europe from saving to investing.
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