The US ETF market is a significant indicator of where product development, investor demand, and competitive pressure may be heading next for European asset managers. According to Josh Jacobs, chief commercial officer at fund administrator U.S. Bank, the most important story is not simply the growth of the US market, but the expansion of the ETF wrapper into areas such as active management, specialist themes, derivatives-based outcomes, and more efficient routes to market.
ETF growth in the US is most notable in active ETFs, but Jacobs highlights that investor appetite does not stop there. Thematic ETFs, which offer investors a clear and tradable way to express a specific market view, are also gaining traction.
Specialist themes, such as computer memory chips and artificial intelligence, are examples of where ETFs are finding success. Jacobs notes that these thematic ETFs provide ways for investors to access pools of securities that they may not have been able to bundle together previously.
In the US, investors are increasingly using ETFs not only for market exposure but also for hedging, income generation, and leverage, Jacobs says. These approaches are appearing in a regulated, exchange-traded format that is easier for a wider pool of investors to access.
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For younger investors, the ETF is becoming the default investment vehicle, whether the end exposure is passive, active, or linked to a targeted theme. This shift is forcing traditional managers to think carefully about product format as well as investment capability.
Jacobs argues that the US innovation wave is not a regulatory free-for-all, but rather the result of clearer rules. Rule 6c-11 has created a more standardized route to market for issuers that comply with the required criteria and governance expectations.
This clarity has led to faster launch times, with some ETFs being launched in as little as 75 to 90 days. In a crowded market, speed to market can determine whether a product captures demand early or arrives after the opportunity has passed.
The rise of active ETFs is also expanding beyond stock-picking to products that actively manage options and other derivative exposures. This is relevant to Europe, where many traditional houses are still working out how much of their active capability should migrate into an ETF format.
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For European investors and issuers alike, the US market is a signal of how quickly the center of gravity can shift when the ETF becomes the format through which innovation is delivered. As the US ETF market continues to evolve, it’s likely that European asset managers will need to adapt to stay competitive.
They will need to think carefully about their product offerings and how they can compete in a global market.
European asset managers face a challenge.
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