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).

Luxembourg is the second-largest centre for ETFs in Europe, with EUR 358 billion in assets under management (AUM.)¹ The domicile is well recognised for its cross-border fund distribution and success in attracting ETFs that are sold internationally. ETFs in Luxembourg are expected to grow in popularity as an investment instrument, appealing to both institutional and retail investors for their flexibility, liquidity and cost-efficiency.

Looking more broadly across Europe, State Street’s 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.²

The report predicts that this trend will persist, with more issuers and products entering the market. An additional tailwind for active ETFs in Luxembourg is law 8414 – passed late last year – which exempts these ETFs from subscription tax, as well as the decision by the Commission de Surveillance du Secteur Financier (CSSF) to allow deferred disclosure of active ETF portfolio composition.³