Morningstar writes that the European Active ETF market has doubled in size over the past two years, yet it still accounts for less than 3 per cent of total ETF assets in Europe, with EUR62.4 billion in assets as of August 2025. JPMorgan is the undisputed leader with a 56 per cent market share, driven by the success of its enhanced index research ETFs.
“Our data reveals that most active ETFs are ‘discretionary,’ relying on fundamental strategies, while fewer use a systematic approach. Active risk remains low, with equity funds typically showing tracking errors below 5 per cent and fixed-income funds below 1 per cent, reflecting a focus on efficient, low-tracking-error portfolio building blocks.
“While the jury is still out on the performance of active ETFs versus their passive peers, initial data suggests they have better success rates than their open-end active counterparts. This indicates that ETFs, with their transparency and lower costs, are beginning to demonstrate their added value for investors. As such, their momentum in the European market is likely to continue,” says Mara Dobrescu, Senior Principal for Fixed Income Strategy Ratings at Morningstar.
Additional key takeaways:
Active ETF adoption, while on the rise, is more modest in Europe than in the US.
Active ETFs are well represented in funds of funds portfolios, suggesting successful adoption there.
New entrants have made their way into the list of active ETF providers, for example Avantis, HSBC, Robeco and Goldman Sachs, though they still struggle to challenge the supremacy of JPMorgan, Fidelity and Pimco, Morningstar writes.
Active ETF fees have continued to trend down as the market has become more competitive, though they remain higher than their passive counterparts.
Transparent ETFs remain the norm, with just one product recently launched under a semi-transparent regime.
Asset growth has been fuelled by flows. From January to August 2025, active ETFs gathered EUR 13.4 billion of flows, of which EUR 8.3 billion towards equity funds and EUR 3.7 billion to bond strategies.
Within equities, most new product launches have been in discretionary and systematic funds with limited active risk. A small number of high-conviction strategies have emerged.
Three outliers stand out for their distinctiveness, Morningstar writes: ARK Innovation, ARK Artificial Intelligence and Robotics, and ARK Genomics.
Within fixed-income, active ETFs are breaking new ground into CLOs and mortgage-backed securities, as well as diversifying the menu of options in corporate bonds, high yield, and emerging market debt.
The jury is still out on the performance of active ETFs versus their passive peers due to limited track records, the firm writes. Initial data suggests active ETFs have better success rates than open-end active counterparts.
