Little over a third of European fund selectors allocate or are planning to allocate to active ETFs, according to a Research in Finance survey.
The European Fund Selector Survey, interviewing 900 retail, institutional third-party fund buyers and distributors, found only 21% of European selectors currently allocate to active ETFs, with a further 13% planning to do so by the end of 2024.
The figures underscore that the European active ETF market is very much still in its nascent stages, with the European active ETF market's $34bn assets under management still representing a small fraction of the $2trn wider market.
Education is also likely to play a role in uptake, with 22% of the market completely unfamiliar with active ETFs.
Regionally, Switzerland are they most positive on the product class, with 28% of investors surveyed allocating to active ETFs, followed by Spain and Germany at 27%, respectively.
The market is still well behind the US in terms of market share, accounting for 31% of flows into active ETFs in May alone.
Research in Finance said several factors including lack of tax advantages, incompatibility of business models and lack of availability through European brokerage platforms.
ETF Stream’s Quarterly Buyer Barometer, which identified several reasons for fund selectors being hesitant to allocate to active ETFs.
Investors cited a limited range of products (25%) and tracking error (21%) as challenges to increase their exposure to active ETFs, with one ETF buyer also citing a lack of transparency surrounding the investment process as a reason for their reluctance to allocate.
