Fidelity International has just released a study on future investment trends taken amongst 125 institutional investors and intermediary distributors in Europe and Asia.

Professional investors are increasingly opting for active exchange-traded funds (ETFs), according to new findings from Fidelity International's Professional Investor DNA Survey.

The firm said that the European ETF market continued to grow in 2024, surpassing $2 trillion in assets under management for the first time. Despite this, active ETFs remain relatively under-represented. According to Morningstar, active ETFs account for 8 per cent of the overall US ETF market, while in Europe it stands at 3 per cent, the firm said in a statement.

However, the firm, which has a number of Fidelity-labelled ETFs, believes that change is underway. It highlighted that the European active ETF market expanded from $38 billion to $64 billion over the past year, as more investors discover their benefits.

The survey of over 120 institutional investors and intermediary distributors across Europe and Asia, in partnership with Crisil Coalition Greenwich, confirmed that nearly a quarter of professional investors are already using active ETFs. The research was conducted in October and November 2024.

US investment house Franklin Templeton has also been expanding its ETF business in Europe recently, including the launch of the Franklin Future of Food UCITS ETF. It is aimed to help create innovation and investment into new technologies in order to produce more food using fewer resources.

The survey shows that demand for active ETFs is expected to increase more rapidly than any other type of investment vehicle over the next 18 months, with 37 per cent of investors surveyed anticipating an increase in their allocations. Intermediary investors show most interest, with 61 per cent anticipating an increase in usage in their portfolios over the next 18 months.

Top reasons for using active ETFs include reducing costs, generating alpha, and accessing specialist areas.

“The anticipated growth in investor allocation to active ETFs identified in our survey reflects the evolving preferences of investors,” Alastair Baillie Strong, global head of ETFs at Fidelity International, said.

“There is growing investor awareness of the benefits of active ETFs; combining the advantages of traditional active funds: flexibility, potential for outperformance; and those of ETFs: lower costs, transparency and ease of access,” he continued. â€śPWC expects the global ETF market to grow to $20 trillion in assets under management by 2030, a 17 per cent compound average growth rate4, and we anticipate that active ETFs will grow even faster, increasing their share as more investors discover their benefits.” 

“Our active ETF business is a key growth driver for Fidelity, and at the end of 2024, we were pleased to solidify our position as the second largest active ETF provider in Europe by assets under management ($6 billion) and net new flows ($2.2 billion),” Baillie Strong said.

Fidelity International, which operates in more than 25 locations, has $893.2 billion in total assets. Its clients range from central banks, sovereign wealth funds, large corporates, financial institutions, insurers, and wealth managers, to private individuals.