Supermodel 2025: Europe’s wealth awakening and the private markets pivot

Patrick O’Brien, Head of Business Development, Ireland

The race to capture new sources of growth in asset management is on – and active ETFs are rapidly emerging as one of the industry’s most dynamic products.

According to our latest Supermodel II survey, more than half (51%) of traditional managers now rank developing new active ETFs as a top-tier growth priority for the next two years, up from 42% in 2024. As margin pressures mount and institutional markets approach saturation, managers are turning to product innovation and new distribution channels to reinvigorate revenue growth.

From margin squeeze to innovation surge

Amid tightening profitability and slowing assets under management (AUM) growth across traditional strategies, firms are seeking new battlegrounds for expansion. Our findings highlight three clear areas of focus in 2025: attracting flows from the wealth segment, launching higher-margin private markets products, and expanding active ETF offerings.

Europe’s appeal has strengthened too. Compared with 2024, more managers are prioritising distribution growth across European markets – driven by untapped wealth opportunities, regional divergence in sustainable investment demand, and uncertainty in US economic policy. Together, these factors are shifting strategic attention toward regions and products that promise scalability, efficiency and resilience.

Active ETFs new wrapper of choice

Active ETFs are transforming how managers think about product design, distribution and scalability. Combining the flexibility of active management with the liquidity and transparency of ETFs, they are increasingly viewed as the ‘wrapper of choice’ for future public markets growth.

Managers cite several reasons for this surge: ease of trading, transparency, and suitability for digital platforms – attributes that make active ETFs especially attractive to wealth managers and retail investors seeking simplicity and cost efficiency.

‘I think what you’ll see is that Europe follows the US and an increasing share of assets will be managed in the ETF wrapper,’ says an operations executive at a European public markets manager. ‘Traditional asset managers are seeing their AUM growth plateauing and margin compression. The ETF wrapper provides benefits in distribution, management and efficiency. It doesn’t replace everything, but for anyone who’s looking to grow and expand their public markets business, I think it’s the wrapper of choice, at least for the next 10 years.’

Europe’s untapped ETF potential

The European ETF market remains significantly underpenetrated compared with the US, presenting a sizeable opportunity for growth. According to EFAMA data, active UCITS ETFs accounted for just 2.4% of Europe’s total UCITS ETF market in 2024, versus 8.4% in the US.[1]

That gap – combined with growing investor appetite for accessible, transparent and tech-enabled products – underscores why active ETFs are poised to become a cornerstone of European public markets strategy over the next decade.

A new chapter for public markets growth

As competition and margin pressures intensify, active ETFs offer managers a pathway to scale efficiently while reaching a broader investor base. The product’s alignment with digital distribution, cross-border access and investor demand for transparency is accelerating its rise.

For an industry seeking to reinvent growth models, active ETFs may not just be another innovation – they could redefine how asset managers compete in public markets for years to come.

Hear more about how active ETFs are gathering pace and what the asset managers we surveyed think in Supermodel II – download the report now.

All references are to Supermodel 2025 data, unless otherwise given.

[1] EFAMA, The rise of active ETFs in Europe, April 2025