The European ETF market has evolved from a niche financial product into a mainstream investment tool over the past two decades. From early innovation to mass adoption, ETFs are now an essential component of European investor portfolios.

The Formative Years

In the early 2000s, the European ETF space was dominated by homegrown players. Lyxor (now Amundi) in France, Barclays Global Investors (BGI) in the UK, DWS in Germany, and UBS Asset Management in Switzerland established strong footholds, gaining assets under management (AUM) from both local investors and in-house multi-asset teams.

These four issuers—or the firms that acquired them—remain among the largest in Europe, demonstrating the difficulty of disrupting the market, especially for US entrants.

US Giants Enter the Market

Acquisition has been the primary route for US asset managers. Notably:

• BlackRock acquired BGI in 2009, gaining the now-iconic iShares business. The firm later strengthened its presence in Switzerland by acquiring Credit Suisse Asset Management’s ETF arm in 2013.
• Invesco expanded through acquisitions, including PowerShares (2006) and Source (2017).
• SSGA and Vanguard achieved growth organically—SSGA through its early 2001 market entry, and Vanguard leveraging strong brand recognition among European retail investors since 2012.

Emergence of New European Challengers

The post-GFC era has seen European asset managers like HSBC Asset Management, abrdn, Legal & General Investment Management (LGIM), and AXA IM launching their own ETF ranges. These firms leverage long-standing market experience to capture investor flows in an increasingly competitive market.

Product Development Milestones

• 2000: Merrill Lynch launched Europe’s first ETFs on Deutsche Börse, tracking the Euro Stoxx 500 and Stoxx Europe 50.
• 2001: SSGA introduced the first sector ETFs in Europe.
• 2003: Indexchange (now part of BlackRock) launched Europe’s first fixed income ETF, with BlackRock now controlling over 60% of the market.
• 2005: EasyETF, a joint venture between BNP Paribas Asset Management and AXA IM, introduced the first commodities ETF in Europe.

Today, thematic and active ETFs are providing opportunities for new entrants, even in a fragmented and competitive market. Upcoming regulations, including a consolidated tape and retrocession fee bans, may create further openings for innovators.

Key Takeaways

• The first European-listed ETF launched in 2000.
• Early dominance was held by European-headquartered asset managers.
• Market fragmentation has made it difficult for new entrants to disrupt the established players, but regulatory changes and thematic product growth are creating opportunities.