The European exchange-traded fund (ETF) market is expected to expand significantly, with assets under management (AuM) projected to reach at least 4,000 billion dollars by 2029, according to a new report from PwC.
The ETFs 2029: The Path to 30,000 Billion Dollars report highlights strong growth prospects for the global ETF sector, driven by increasing retail investor participation, demand for active ETFs, and continued dominance of Irish-domiciled funds. Europe’s ETF AuM grew by 24 percent in 2024 to reach 2,200 billion dollars, supported by record net inflows of 266 billion dollars.
Global ETF assets could more than double to exceed 30,000 billion dollars by 2029, according PwC’s projections. Some 18,000 billion dollars of that is expected to be in the U.S. ETF market.
Ireland in the lead as European ETF hub
Ireland remains the dominant force in Europe’s ETF industry, accounting for nearly 80 percent of the region’s assets. Luxembourg, Germany, and France make up most of the remainder of the market.
PwC’s findings indicate that more than 61 percent of survey respondents expect European ETF AuM to reach at least 4,000 billion dollars by 2029, with 22 percent predicting it could exceed 4,500 billion dollars. This represents a compound annual growth rate (CAGR) of around 15.5 percent, outpacing the broader asset and wealth management industry’s expected growth of 5.9 percent.
Retail investors and active ETFs drive expansion
One of the most significant growth drivers for Europe’s ETF market is the increasing involvement of retail investors. Nearly 74 percent of survey respondents expect substantial growth in this segment over the next two to three years, largely due to the rise of digital investment platforms, ETF savings plans, and investment apps offering low-cost and diversified exposure.
Active ETFs are also gaining momentum. Europe saw record inflows of 19.7 billion dollars into active ETFs in 2024, with demand expected to continue rising. Globally, active ETF AuM surged by 52 percent in 2024 to surpass 1,000 billion dollars, and PwC forecasts that figure could reach 3,000 billion dollars by 2029.
Challenges and opportunities in digital innovation
Technology is reshaping Europe’s ETF landscape, with digital investment platforms and robo-advisors playing a growing role in distribution. PwC’s report highlights AI, blockchain, and tokenisation as key innovations that could enhance ETF accessibility and lower costs.
However, Europe faces challenges in regulatory constraints. While the US and Canada are advancing approvals for crypto and digital asset ETFs, Europe’s stricter oversight is slowing their adoption, PwC noted. Despite this, one in three asset managers plans to launch digital asset ETFs once regulations allow.
“ETFs are increasingly becoming the vehicle of choice for investors seeking low-cost, diversified exposure. In Europe, the expansion of digital distribution and active strategies is unlocking new growth opportunities,” said Marie Coady, PwC global leader for ETFs.
Further reading on Investment Officer Luxembourg:
- “Highly unlikely that Luxembourg will catch Ireland in the ETF space”
- Strong inflow into European equity ETFs, thanks in part to Financials and Industrials
- Amundi’s fund inflows double to Є55 bln in 2024, ETFs lead growth