UK Fund Giants Enter Active ETF Space
Two of the United Kingdom’s largest asset management firms, Royal London Asset Management and M&G, are reportedly planning significant entries into Europe’s active exchange-traded fund market, according to recent reports. Sources indicate this strategic shift comes as the sector experiences explosive growth while traditional mutual funds face increasing fee pressure from investors.
Royal London’s Ambitious Expansion Plans
Hans Georgeson, chief executive of RLAM, reportedly told the Financial Times that the £184 billion group plans to open a Dublin office within 18 months to support its international expansion and active ETF market entry. “The active ETF market is moving very fast,” Georgeson stated, according to the reports. “We plan to enter in the top 10. We are very ambitious in the active ETF space. We will probably launch with both equity and fixed income.”
Analysts suggest that ETFs offer greater international accessibility, with Georgeson reportedly describing them as “a key plank for passporting internationally” amid broader industry developments.
European Active ETF Market Boom
According to a recent analysis by Goldman Sachs’ fund arm, assets under management in Europe’s active ETF industry have grown nearly sevenfold since 2019, reaching €68.6 billion. The report states that the number of funds and providers has “followed a similar trajectory, with launches of active ETFs outpacing passive launches for the first time,” signaling a significant shift in market trends.
Active ETFs differ from traditional “passive” ETFs by allowing fund managers to attempt to beat market indices rather than simply tracking them, while maintaining the structural advantages of the ETF format including lower costs and greater trading flexibility compared to traditional mutual funds.
M&G’s Impending ETF Launch
M&G Investments is reportedly preparing to unveil its first active ETFs within weeks, with initial products focusing on UK government bonds and US Treasuries. Neil Godfrey, global head of client group at M&G Investments, suggested that “ETFs will open up possible new investor audiences and potentially expand our partnerships with our existing investor base.”
Godfrey further indicated that as many clients already use and understand ETFs, the natural evolution toward active solutions presents new engagement opportunities with capital allocators and their advisers across the UK, Europe, and Asia, reflecting broader related innovations in financial product development.
Industry-Wide Shift Toward Active ETFs
Other traditional fund management groups have reportedly entered the European active ETF market this year, creating increased competition. Last month, Schroders unveiled its first active ETFs in Europe, investing in global equities and high-quality corporate bonds. Johanna Kyrklund, Schroders group chief investment officer, reportedly stated that the products combine the “flexibility and accessibility” of an ETF wrapper with the potential for higher returns through active management.
Jupiter also entered the sector at the start of the year with a global government bond active ETF. Matthew Beesley, chief executive of Jupiter, reportedly expressed concern that “the risk is that if you sit there and don’t do anything, ETFs will continue to cannibalise the assets held in traditional funds,” highlighting the strategic imperative for traditional asset managers to adapt to market trends.
Structural Advantages Driving Adoption
Analysts suggest that the structural differences between ETFs and traditional mutual funds are contributing to the rapid shift. While traditional mutual funds are priced once daily based on the value of their underlying investments, ETFs trade on exchanges with pricing throughout the trading day, providing greater flexibility for investors amid ongoing industry developments.
The entry of major players like Royal London and M&G into the European active ETF space reportedly signals a broader industry transformation as asset managers respond to investor demands for more accessible, cost-effective investment vehicles that combine the benefits of active management with the structural advantages of the ETF format, including various related innovations in financial technology.
This article aggregates information from publicly available sources. All trademarks and copyrights belong to their respective owners.
Note: Featured image is for illustrative purposes only and does not represent any specific product, service, or entity mentioned in this article.
