Exchange-traded funds (ETFs) in Europe are booming. The market established a new highwater mark in 2024, with investment inflows in the region reaching US$270 billion — nearly 40 percent higher than the previous record, according to State Street’s recent report, 2025 Global ETF Outlook: The Expansion Accelerates.

Importantly, ETFs attracted inflows across all asset classes (equity, fixed income, cryptocurrency) and strategies (active, ESG, leveraged/inverse, passive, smart beta).

The UK is the world’s largest asset management centre outside of the United States. Institutional investors dominate the market, but retail participation has grown strongly in recent years. The country has 19 million investors, representing 36 percent of the adult population.¹ This number is growing rapidly: The UK has produced the biggest influx of new investors anywhere in Europe, with more than 3.5 million people entering the market since 2022 ( a rise of 21 percent).²

The London Stock Exchange (LSE) first listed an ETF back in the year 2000. The market has grown dramatically over the past 25 years, with increased product diversity reflecting growing demand for innovative, cost-effective and transparent investment solutions. The LSE now hosts more than 2,350 ETF products with over £1 trillion in assets under management AUM, while in 2024 alone, 270 new exchange traded products were launched on the Exchange.³

The UK’s mature regulatory framework also supports the continued growth of ETFs. Another major incentive for retail investors is that ETFs can be held within stocks and shares individual savings accounts (ISAs), making capital gains and UK dividends tax-free within the annual allowance.

Looking more broadly across Europe, State Street’s 2025 Global ETF Outlook also explores the growth of active ETFs as one of the emerging trends shaping the European market. Inflows into active ETFs rose from US$7 billion to US$20 billion in 2024. At the same time, the number of active ETF products also increased significantly, from 103 to 178. It is striking that inflows into active ETFs were equal to 74 percent of the previous year’s total assets under management in Europe.⁴

The report predicts that this trend will persist, with more issuers and products entering the market, including standalone strategies and the expansion of unlisted funds launching a listed share class.