State Street Global Advisors plans to launch active ETFs in Europe this year, according to Ann Prendergast, executive vice president and head of EMEA at SSGA in an interview with Morningstar.
State Street has had a number of active ETFs available globally, both through its brand SPDR and through its partnerships, across active equity, fixed income, and digital ETFs.
In 2025, however, these SPDR products are slated to arrive in Europe.
“It will be in the area of equity, fixed income, and alternative capabilities, through both our systematic or fundamental capabilities, which are in-house, and through our partnerships as well.”
Prendergast explains that Europe is now catching up with the active ETF trend that took off in the US around 2019, Prendergast says. Active ETF inflows across Europe have ticked up from $7 billion (£5.42 billion) to $20 billion in 2024 and the number of products has grown from 103 to 178, according to State Street. The number of providers has increased 28 to 35, she says.
Active ETFs Sweep Europe
In a February article on Morningstar.co.uk, we detailed the most recent active ETF product launches, including products from dominant players J.P. Morgan, Fidelity, and Janus Henderson, as well as UK-listed fund manager Jupiter JUP, in partnership with HANetf, and US investment bank and asset manager Goldman Sachs GS. Dutch asset manager Robeco launched four active ETFs last year and is planning to launch an EM-focused product in Q1 2025. UK fund manager Schroders SDR is also planning to enter this market.
State Street Global Advisors captured $26 billion in net inflows in 2024, aided by a strong rally in US markets and reduced fees within its range. It also launched two quality aristocrat products: SPDR S&P 500 Quality Aristocrats UCITS ETF QUS5 and SPDR S&P Developed Quality Aristocrats UCITS ETF QDEV.
Prendergast added: “This is not about undercutting our competitors, not about a race to the bottom. It really is about ensuring that we deliver value for our clients.”
High Demand for State Street ETFs Outside the US
While retail adoption has grown significantly, the demand for State Street’s ETFs has increased from institutional clients too, she says. She believes this trend could continue as these clients see the benefits of using ETFs within their portfolios.
In its 2025 ETF outlook, State Street also highlighted how Europe could be set for record ETF growth, aided by modernized regulation. One example is a recent Luxembourg decision to exempt active ETFs from subscription tax and allow delayed portfolio disclosure. “We expect other jurisdictions to follow suit,” she adds.
What State Street Expects in European ETFs
• There will be a growth of ETF issuer-led and other new white label solutions to facilitate new issuers entering the market.
• A minimum of 10 new entrants will launch ETFs or expand from passive to active ETFs.
• The majority of these new entrants will be coming to market primarily with active strategies.
• At least two of the new entrants will do so by adding ETF share classes to an existing mutual fund range.
• Existing issues will use acquisition to gain additional scale, or traditional fund managers will use acquisition of an existing ETF issuer to enter the ETF market.
• Reduced portfolio transparency requirements will be expanded to Ireland (currently enabled in Luxembourg) with at least one manager leveraging the capability.
• Active ETFs will grow from 3% of AUM and 7% of flows to 4% of AUM and 10% of flows.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar's editorial policies.
