State Street has forecast that actively managed ETFs will overtake passive products in Europe by launch numbers in 2026, marking what it sees as the next stage in the region’s ETF development. In its 2026 ETF outlook, titled “From wrapper to backbone”, the firm reports that active strategies gathered more than $38bn of inflows in Europe during 2025 and accounted for over 36% of new product launches. Active equity ETF launches had already moved ahead of passive equity launches during the year.
The firm says it expects that momentum to broaden further this year, with active ETF launches set to exceed all passive launches across the European market. It points to rising retail participation, expanding white-label infrastructure and growing adoption of listed and unlisted fund structures as factors likely to support the shift.
State Street argues that the European market remains at a relatively early stage despite the recent growth, with active ETFs still making up only around 3% of total ETP (Exchange-Traded Product) assets in the region. That leaves considerable room for expansion, particularly as more traditional asset managers enter the market and use ETFs as an additional distribution format rather than a niche wrapper.
The report suggests the next wave of competition may come from a broader set of entrants. State Street expects at least 15 new issuers to come to market in Europe in 2026, with most focused on active strategies and many likely to use white-label platforms to accelerate launches.
The report also predicts that active fixed income could become an increasingly important area of product development, predicting that launches and flows in that part of the market will each account for more than 40% of active ETF activity in Europe this year.
Our view
David Batchelor, senior analyst at QuotedData, said: “The direction of travel is clear – active ETFs are becoming a much more important part of the European product pipeline. What stands out in State Street’s report is not just the forecast that active launches could overtake passive, but the sense that the market is broadening, with more issuers, more fixed income strategies and more routes to market all helping to accelerate adoption”.
