Interest in active ETFs is rising among European institutional investors, with nearly 30% already using them, but broader adoption is held back by challenges such as complexity and knowledge gaps, according to a JP Morgan Asset Management survey.
In collaboration with Research in Finance, the study involved qualitative research interviews with 70 institutional fund selectors and decision makers from pension schemes, insurers, consultancy firms and foundations, across 12 European countries, including the UK, Germany, Italy and France.
The study has identified two clear groups among institutional investors— with 27% of respondents “actively” using ETFs for tactical and strategic goals, while 73% remain “considerers,” many of whom anticipate utilising active ETFs soon.
Early adopters leverage active ETFs for cost-savings, risk management, and aligning with thematic goals, particularly in navigating market volatility. Conversely, considerers cited barriers such as a preference for passive ETFs, structural challenges, and knowledge gaps, which have slowed adoption.
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Fixed income and ESG themes emerged as key areas of untapped potential for active ETFs, with many institutions recognising their relevance to future strategies.
Geographically, active ETF adoption is strongest in Italy, France, and Germany, with allocations varying significantly across Europe. The report underscored the need for education and demonstrable performance to convert Considerers into users, particularly as thematic and sustainable ETFs gain traction as potential gateways to broader adoption.
“These are encouraging results. Given the majority of active ETFs globally are less than 3 years old, it’s impressive to see that nearly 30% of large asset owners in Europe are already utilising active ETFs,” said Travis Spence, global head of ETFs at J.P. Morgan Asset Management. “We expect institutional investor adoption to increase in the coming years as active ETF track records mature and scale is achieved. Our research highlights the need for greater education and clarity around the benefits of active ETFs – transparency, flexibility, liquidity, cost-efficiency, and potential for outperformance – to unlock their full potential in institutional portfolios so that Europe’s institutions aren’t missing out on the active ETF opportunity.”
