Christopher Johnson: Active ETFs have become all the rage in Europe and post the acquisition of Lyxor Asset Management, French juggernauts Amundi has become a market leader in passive investments. But can it beat out the likes of iShares? To discuss all this and more, I’m joined by Benoit Sorel, the global head of ETFs, indexing, and smart beta at Amundi. So my first question to you is why is the active ETF market growing so much in Europe?
Why Have Active ETFs Taken Europe By Storm?
Benoit Sorel: Well, the active ETF market grew €16 billion last year. So 6% of the market, which is significant indeed. And ETFs are just becoming a core investment vehicle for all investor segments from the most sophisticated individual to the man on the street. And as you know, ETFs as a whole, had their biggest year ever, last year and 2025 is actually following that pace. Going back to your precise question on active, proportions are obviously much larger in the US where you have a tax advantage. But in Europe indeed we still see a very big trend towards active ETFs. And I would say there are there are four key trends in terms of, client use case, which is the most important thing. The first one is systematic solutions, pure quants, or mixing quantitative and fundamental, with relatively low tracking or budget and offering an active alternative to indexing.
Number two is, ESG overlays, whereby the active nature of the ETFs gives more leeway to manage sustainable parameters. And typically we launched last year, new exposures complying to the French ESG label, with an active overlay, which gives us more flexibility in that sense. Then you have basically, in a way, replication of successful active strategies in an ETF format to open up new distribution channels. And last one I would say is the thematic products, which by nature are less benchmarks, and a new asset class for retail. And so there is a key trend in the market indeed. And obviously at Amundi our aim has always been to listen to our customers and evolve solutions specifically to address their challenges. And this is something we’re looking at, obviously, and we’re actually going into.
Can Amundi Knock iShares Off the Top Spot?
Johnson: And does Amundi have goals to take over iShares as the top ETF provider. And if so, how can you achieve this?
Sorel: Well, Amundi has very ambitious goals for ETFs, in general. And I would say the key differentiators, or the key things, we want to promote are—well, there’s a few things actually. There’s one, to be a key player in that market, you need scale. We do have scale now; our assets are above €270 billion in ETFs. We did the acquisition of Lyxor, obviously, and the convergence of the ranges. And now we are a true scale player in that range, which is, criteria number one. Criteria number two, we have a strong European DNA and proximity with our clients. This allows us to better understand the leads of the local market. So, we have a global offering with a local presence. For instance, the one key element is digital wealth. We’ve signed 12 new partnerships with digital players last year. And now we have partnerships with like 45 players across Europe and Asia. PEA (Plan d’Epargne en Actions), which is a local tax wrapper in Europe, we have the widest range in the market with more than 100 ETFs eligible to PEA. Products is a key element of understanding local markets. Last year, we had the most successful new ETF launch in the market with our Prime All Country World ETF WEBJ, which now stands above €2.2 billion in AUM. I mentioned already the launch of SRI label, which is also key understanding of the market, but we could go all the way to Latin America’s central banks, where we launched an ETF on [global corporate debt] for them; [Amundi] MSCI USA WEBL, which we did in September across 800 billion; and just this week we announced our Lifecycle ETFs with CaixaBank. So I think we have global range, local presence, which is extremely important. And last one I think being a responsible investor is extremely important in particular for European players. And whether you invest in ESG exposure or in standard exposure, having a key partner with a clear stewardship and voting offering is critical in indexing. So I think we have very strong ambitions but means to actually achieve this ambitions.
Amundi’s ETF Offering
Johnson: Benoit you touched on the acquisition of Lyxor Asset Management and you’ve rebranded several ETFs that have come from that acquisition. In your view, has the process been successful and is there more to come?
Sorel: The process has been extremely successful. I think that this was my first point, actually, to be ambitious in this market, you need scale. You need scale in the sense that you need a global offering and all the exposures. And you need the size to actually offer competitive exposures. So this was a key element in Amundi’s growth. And it’s been to handle extremely successfully with zero operational events. And always having the priority of putting our clients at the centre of what we do. But it’s been a massive accelerator for Amundi indeed.
Johnson: In December 2024, Amundi launched six active ETFs in equities and bonds targeted at French investors. Will you expand these products for investors outside of France as well?
Sorel: Well, these products are available for investors, outside of France as well. The key reason we launched these products in an active format, as I mentioned earlier, was to comply with the French SRI label which is quite demanding in a way, and we wanted to make sure that we always had the flexibility to adjust to the label, to comply with this label, managing efficiently the exposure and the tracking error. So these indices are available for any investor who wants them. But indeed, they were created to comply with the French label.
What Makes Amundi an ETF Market Leader?
Johnson: And according to Morningstar research, out of the top 20 ETF and ETC providers, Amundi took second place, beating out the likes of Xtrackers. So, what are you going to do to maintain this position?
Sorel: I’m not commenting about the competition, and this time, same answer as your previous question on our ambition in ETF, around, again, global offering, client centricity and responsible investing. These are the three key differentiators. And if you look at numbers in a way, I think to go back to my points one and two, we’re extremely diversified, in our book of business. Diversified in terms of products, in terms of clients, and in terms of geographies. And if you look in general its obviously too short to draw a line up to December. But if you look at January, for instance, we had 20 ETFs with more than €100 million flows in net new assets. So we’re not just like focusing on one or two key exposures. We’re really a global player.
Johnson: I also wanted to go back to your point about digital wealth. Why has it been so important for Amundi to establish itself within that realm?
Sorel: Well, it’s just that that market segment has been extremely important for ETF players all together. This is a market segment that is still relatively new. And it really emerged through Covid when advisors couldn’t meet with their clients anymore and had to go digital to interact with them. And it’s growing massively since then. And obviously ETF is the plug and play tool for these players to talk to their clients. So, we have an alignment of interest between a new distribution channel and an efficient vehicle to target that distribution channel, which is raising significant assets. So, it’s obviously a key priority for us.
What Is the 2025 Outlook For ETFs?
Johnson: And lastly, what is your overall outlook for ETFs in 2025?
Sorel: Okay. Well thank you. I was afraid that you were asking me my outlook on the market, which is very, complex to predict with our current geopolitical venues. But on ETFs I’m extremely bullish. I mentioned 2024 was the largest year ever for ETFs. I think 2025 we’re going to keep seeing this acceleration. We’re not at the end of an era. We’re at the beginning of a new era for ETFs because ETFs again are relevant to the most sophisticated institutional investors, being central banks, to the man in the street with digital wealth. And I think markets will be extremely fragmented and volatile this year. So, one thing for sure is, all these investors will need an investment tool that can give flexibility to react to market conditions. An ETF is just the perfect tool to do so. So, I’m extremely bullish for ETFs in 2025.
Johnson: Thank you for being here with me. This is Christopher Johnson for Morningstar UK.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
