European ETF Market Set to Grow 15% Annually Until 2030

Explore the forecasted growth trends of the European ETF market, with assets under management expected to exceed $4.5 trillion by 2030.

The European ETF market experienced a significant surge in 2023, with assets under management reaching over $1.8 trillion, marking a 28% increase. This growth was attributed to strong market performance and investor preference, as highlighted in a recent study conducted by accountancy firm EY. The research also projected a 15% annual growth rate for the European ETF market over the next five years, with assets under management expected to exceed $4.5 trillion by 2030.

One of the key drivers of ETF AUM growth is the increasing popularity of active funds, which are focused on enhancing retail involvement, advancing ESG initiatives, and leveraging AI and digital assets opportunities. In 2023, more than 70% of European ETFs were based in Ireland, with assets under management forecasted to surpass $3 trillion by 2030. Luxembourg emerged as the second-largest ETF market in Europe, holding a 29% market share.

The study also highlighted the role of AI in ETFs, with its ability to conduct big data analysis, predict patterns and trends, and perform investment research. AI is particularly valuable for identifying and responding to market events, making it beneficial for index-tracking strategies.

Despite a dip in global ESG ETF inflows in 2023, European ESG ETFs are expected to remain a long-term investment theme. Europe, being a global leader in this market, accounted for a quarter of ESG ETF flows in 2023. However, European ESG ETF investment totaled $345 billion by the end of the year, representing less than 5% of the global market and just 19% of the European market, indicating significant growth potential.

Digital assets are also gaining traction across Europe, with the approval of bitcoin ETFs by the US SEC in January 2024 further boosting their adoption. Currently, digital assets represent $13 billion of ETPs across Europe, with expectations of wider adoption in the future.

The European ETF market is poised for continued growth and innovation, driven by factors such as active funds, ESG initiatives, AI integration, and digital assets adoption. With assets under management projected to surpass $4.5 trillion by 2030, the market is set to experience significant expansion and evolution in the coming years.