Brett Pybus does not sound like a man trying to talk up a mature market. The co-head of iShares Europe at BlackRock describes the exchange-traded fund industry as being on an “acceleration path”, with Europe still far from the point at which ETF adoption can be considered mainstream.
“2025 was a record year for the business in Europe,” he says. “We had record-breaking net new business last year and that continued into January and February.”
March brought volatility, and with it some flow instability. That, Pybus says, is part of the nature of ETFs. They are not only long-term investment tools but also trading instruments, used by clients “to actively risk and de-risk”. Yet he says the wobble was short-lived, with “a really strong bounce back in flows in April”.
The conclusion, in his view, is clear: “I would say the business is in rude health from a flow and, more importantly, from a client adoption perspective.”
That distinction matters. The ETF industry has never lacked for flow statistics, but Pybus’s broader argument is that Europe is undergoing a structural shift in how investors access markets.
The same ETF, he notes, can be used in very different ways: by a German saver putting small monthly sums into a digital savings plan; by an asset manager making a tactical call on market beta, or by an institution seeking fast, liquid exposure to fixed income. The product’s versatility, rather than any single asset class, is the engine of growth.
Digital savers and fee-based wealth
Two forces stand out in Pybus’s account of the European market. The first is the rise of digital investment platforms, particularly in Germany, where self-directed investors have embraced ETF savings plans.
That model, he says, is spreading into France, the Nordics, Italy and even the UK, a market that has historically lagged continental Europe in retail ETF adoption.
The second is the growth of fee-based and “clean fee” wealth models. ETFs have tended to thrive where advisers and discretionary portfolio managers are paid transparently for advice or portfolio construction, rather than through commission-like structures embedded in products.
The 49-year-old father of two says that discretionary portfolio management and fee-based channels now account for about 47% of assets under management, up from 36% five years ago. BlackRock expects that to rise to 55% by 2028.
The change is not just about replacing expensive funds with cheap market trackers. Wealth managers, he argues, are becoming more sophisticated in how they use the ETF toolkit. Broad exposures such as MSCI World or the S&P 500 remain central, but portfolios are increasingly making room for sectors, factors, thematic funds and other targeted exposures.
BlackRock calls these “precision exposures”. In plain English, they allow portfolio managers to dial up or reduce exposure to particular sources of risk — technology, financials, semiconductors, defence, geography, duration or credit — without having to buy the underlying securities directly.
“Particularly through the market environment which we’ve had in the last few years, we’ve definitely had some choppy periods,” Pybus says. “We’ve seen some of those investors become a bit more dynamic.”
Why Britain has lagged
It is striking that the UK, home to one of Europe’s deepest financial markets and BlackRock’s main regional workforce, has not been among the continent’s strongest ETF markets.
Pybus attributes that 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 and ETFs appear more frequently on the lists of securities self-directed customers are choosing for themselves. But the UK still faces the same bigger policy question as the rest of Europe: how to turn savers into investors.
“The biggest competitor is probably cash deposits, if you take a really macro, abstract view of the world,” he says.
He is careful not to prescribe a UK tax policy agenda, but says simplified advice could help close the advice gap and support lower-cost investment models. Across Europe, he sees political momentum behind measures to mobilise savings into more productive long-term capital, including retirement reforms and tax incentives.
For professional investors, he points to another long-running industry demand: a consolidated tape for European markets. Unlike the US, where ETF trading volumes are easier to observe across a unified market structure, Europe remains fragmented across exchanges and off-exchange venues.
A consolidated tape (a live or near-live record of prices and volumes for securities that trade across multiple exchanges, alternative trading systems, or off-exchange venues), he says, would give investors a clearer view of the “true depth of liquidity” in an ETF, particularly in products such as European corporate bond funds that trade across multiple venues.
Fixed income comes of age
Pybus joined BlackRock in 2013 with a background in active fixed income and little ETF experience. BlackRock already had “lots of people who know about ETFs”, he says. What it wanted was someone who could talk to bond investors in their own language.
At the time, fixed income ETFs were still nascent. The challenge was to take them “into the mainstream of bond investing” and explain them not as fund products but as practical tools for investors used to buying individual securities.
The journey, he says, has moved from scepticism to acceptance. Early questions were blunt: why use an ETF, would it break in a crisis, could it be arbitraged? The decisive test came during the Covid market shock, when fixed income ETFs were scrutinised heavily.
“The product did exactly what it said on the tin,” Pybus says. It provided liquidity, offered price discovery and gave investors a view of market levels at a time when parts of the bond market were hard to price.
That experience accelerated institutional adoption. Asset managers now use bond ETFs to equitise cash quickly, gain exposure to high yield or collateralised loan obligations or manage duration and credit views. Wealth managers can use them as a diversified alternative to building small portfolios of individual bonds.
For retail investors, the case is simpler still. “Buying individual bonds is really hard and really, really expensive,” he says. “It’s different if you’ve got BlackRock’s trading desk to go and deploy to the street.”
Despite recent growth, Pybus argues fixed income ETFs are still small relative to the broader bond market. He estimates they represent only about 2 to 3% of the cash bond market, compared with equity ETFs at roughly 10 to 11% of the equity market. That gap, he believes, points to substantial room for expansion.
Active ETFs and the wrapper wars
If ETFs were once synonymous with index investing, Pybus says that definition is now too narrow. The wrapper is being used for active strategies, digital assets, outcome products and increasingly specialised fixed income exposures.
BlackRock has raised about $7bn to $8bn in its European active ETF line-up, he says, with active products accounting for roughly 10% of inflows last year and a similar share so far this year.
Some of these products are not traditional stock-picking funds. Pybus describes a spectrum: exposure products where some active discretion helps manage assets such as cash or CLOs; systematic equity strategies that seek incremental returns over an index; and more fundamental active products, including an artificial intelligence strategy from BlackRock’s fundamental equity team.
The US market is further ahead, with ETFs increasingly treated as the default fund wrapper. Europe, by contrast, is still in the early stages. Mutual funds remain strong in many countries, particularly where distribution models still support them. But the direction of travel is evident. “I think what we’re seeing there is demand, and it’s growing relatively strongly,” he says.
He does not predict that active ETFs will overtake trackers. Indeed, he says index investing in Europe itself has far to run. The average European wealth portfolio has about 20% index exposure, compared with closer to 50% in the US. In fixed income, index adoption is lower still.
Bitcoin, defence and demand-led innovation
Not every ETF launch is designed to be a core portfolio building block. BlackRock’s European Bitcoin product, which gathered over $1bn in the twelve months since it was launched in March 2025, is one example of the industry using the ETF wrapper to make a new exposure more accessible.
Pybus is cautious in how he talks about crypto. BlackRock’s role, he says, is to provide “a bridge” for investors seeking exposure to Bitcoin “in a wrapper they understand”, with appropriate levels of security and operational comfort.
Europe was already a competitive market for crypto exchange-traded products when BlackRock entered. “We won’t necessarily be the first to launch,” he says. “But we’ll be very focused on bringing a high-quality product to market that investors can trust.”
The same demand-led logic applied to BlackRock’s European defence ETF, launched in May 2025 in response to client interest in a theme shaped by the geopolitical environment.
Other recent innovations include geographic revenue products, designed to separate where a company is listed from where it actually earns its money. The FTSE, Pybus notes, may be a UK benchmark, but much of its revenue exposure comes from overseas.
For all the talk of flows, wrappers and market structure, Pybus is alert to the risk that the ETF industry becomes too fascinated by its own innovation.
“One of the really positive, exciting things is all of the innovation that we see,” he says. But the industry also has to keep its focus on clients and purpose: building useful products for a diverse investor base.
“A billion dollars in a Bitcoin ETF is amazing,” he adds. “But equally, most of our customers are buying S&P 500, MSCI ACWI or MSCI World, or building really robust, good portfolios.”
Pybus’s central claim is that ETFs are becoming one of Europe’s main routes from saving to investing. The more difficult question is how quickly governments, platforms and advisers can help the rest of the market catch up.
