Active ETFs now anchor 19% of institutional ETF assets in Europe
A Crisil Coalition Greenwich report finds a majority of European institutions and distributors use active ETFs and plan to add more.
European institutions that use ETFs are keeping close to a fifth of those assets in active strategies, according to Crisil Coalition Greenwich. The research firm's report, "Creating and Capturing ETF Demand," puts the average active share at 19% of institutional ETF holdings, with the percentage higher among larger investors. More than 40% of institutional users expect to increase active usage over the next two to three years, with interest spread across equity, thematic, and fixed income funds.
Active ETFs, the report finds, are being used as strategic allocations more often than as tactical or short-term positions. Some institutions also employ them for portfolio completion.
Distributors show a similar pattern. At firms that carry ETF products, active strategies average 12% of ETF assets, and the share rises with firm size. A majority of both institutional investors and distributors already invest with active ETFs and plan to add more, the firm said.
The way managers get chosen differs for active funds. The manager's track record is the top consideration, according to the report, followed by fees and the strength of the manager's ETF brand. Distributors also weigh historical performance and manager reputation alongside liquidity and expense ratios. Benchmark design plays a supporting role for institutional investors.
The report also maps how managers attract that demand. Institutional investors discover new ETFs through databases, manager websites, industry events, word of mouth, and direct outreach. Credibility is reinforced through case studies, portfolio construction content, research papers, and market commentary. For distributors, performance analysis and investor-education materials prove most effective.
None of this means passive ETFs are retreating. But the report's numbers point to a steady shift: active ETFs have become a standard strategic allocation for a broad swath of European institutions, and the distributors they buy through are planning to expand those shelves. The managers likely to win that flow are those with the strongest performance records and the distribution reach to make the records known.
The Tape