ETF : Transformations and Opportunities for the wealth industry

09•12•2025

Market dynamics and key players

Assets Under Management and Inflows : an Exponential Growth

In 2024, global ETF assets under management exceeded $10 trillion, marking a significant increase compared to previous years. This growth is driven by a net inflows of over 1 075 trillion dollars, illustrating the growing appeal of these instruments for both institutional and retail investors.

In Europe, assets under management reached 2 274 trillion dollars, representing a 25% increase compared to the previous year. Net inflows were also remarkable by setting a new record at 270.4 billion dollars.

In France, ETFs continue to gain popularity, with notable increases in assets under management and inflows, particularly in technology sectors and emerging markets.

Key Players and Market Concentration

The ETF market is dominated by a few major US players, notably BlackRock (iShares), Vanguard, and State Street Global Advisors. These asset managers represent virtually all global assets under management, thanks to their ability to offer diversified, low-cost products. In Europe, asset managers such as UBS and Amundi (the European leader) have also strengthened their presence, contributing to market dynamics.

Market concentration remains high, with the 20 largest European ETFs representing 21% of the sector’s total market value.

What Advantages and Disadvantages of ETFs for Asset Managers, Private Banks, and Life Insurers

For Asset Managers

Advantages	Disavantages
Economies of scale : Once the ETF is structured, marginal costs are low. Asset managers can then replicate an index without significant additional management costs.	Pressure on traditional management margins : The growth of ETFs puts pressure on the margins of traditional asset managers/active funds. Active management performance must be justified in a context where comparison with benchmarks versus ETF proxies becomes easier for investors, particularly through Value For Money regulations.
Access to a broader client base: ETFs attract not only institutional investors but also retail investors, thereby expanding the potential client base. This client diversification enables asset managers to reach a wider audience and meet varied needs.	Concentration risk : The popularity of certain indices or issuers can lead to excessive concentration, amplifying market movements. Investors must be aware of this risk and diversify their investments accordingly.
Effective tools for tactical management and building blocks in wealth management or profiled solutions : ETFs offer flexible solutions to quickly adjust portfolio exposures and hedge risks. They also help reduce overall allocation fees while maintaining diversified allocation.	Regulatory complexity : ETFs, particularly those incorporating ESG criteria, are subject to increasingly complex regulations. Issuers must navigate this regulatory framework to ensure product compliance and transparency.

For Private Banks

Advantages	Disavantages
Simple and transparent diversification : ETFs enable easy portfolio diversification for clients with high transparency on underlying assets. This transparency is essential for clients who wish to understand precisely where their money is invested.	Market risk : Like any stock market investment, ETFs are subject to market fluctuations and are therefore risky. Private banks and their bankers must properly inform their clients about this aspect, but also manage this risk in case of portfolio management delegation by their clients.
Easy integration : They can be easily integrated into discretionary mandates or model portfolios, thereby simplifying portfolio management. This ease of integration enables private banks to offer efficient investment solutions tailored to their clients' needs.	Hidden fees : Although ETF management fees are generally low, some may include hidden fees that can affect long-term profitability. Clients must be informed of these fees to avoid surprises.
Reduced fees for clients : The lower costs of ETFs translate into reduced fees for clients, thereby improving the bank's competitive offerings. Clients benefit from high-performing investment products at lower costs, which strengthens their satisfaction and loyalty.	Less suitable for short-term : Although tradable at any time, ETFs are generally less suitable for short-term investment strategies than other financial products (target-date funds, etc.). Private banks must assess whether ETFs are appropriate for their clients' investment objectives.

For Life Insurers

Advantages	Disavantages
Diversification of unit-linked offerings : ETFs are increasingly used in life insurance contracts to boost unit-linked returns, generally within managed allocation frameworks.	Absence of active management: They do not benefit from the active management of a fund manager who could adjust the portfolio according to market conditions and management convictions (except for active ETFs).
Thematic or sector exposures : They provide access to specific sectors or investment themes at lower cost. Life insurers can thus offer diversified investment solutions adapted to market trends.	Variable performance : ETFs may underperform certain equity funds, depending on market conditions. Life insurers must assess whether ETFs are appropriate for their clients' performance objectives.
Reduced fees : ETF management fees are generally lower than those of traditional funds (generally <0.50%), but attention must be paid to transaction fees, especially if ETFs are bought and sold frequently, and who bears them (client or insurer).	Lower profitability : Since ETFs have lower management fees than traditional funds, retrocessions on management fees received by insurers from asset managers are lower.

In conclusion, ETFs present numerous advantages for asset managers, private banks, and life insurers, but they also entail challenges and risks that must be carefully managed. Their growing popularity and integration into various types of portfolios demonstrate their importance in the current and future financial landscape.

ETFs on the 2030 Horizon : What Trends for a Market in Transition?

As ETFs have secured a central position in investment strategies, their evolution shows no signs of slowing down. On the contrary, several structural trends are reshaping the contours of this maturing market. An overview of the dynamics to monitor.

The Rise of Thematic and Sector ETFs

Investors, both institutional and retail, are increasingly seeking targeted exposures to megatrends: artificial intelligence, energy transition, cybersecurity, aging population, etc. Thematic ETFs meet this demand by offering direct exposure to promising investment universes while retaining the advantages of passive management (liquidity, transparency, reduced costs). This evolution marks a shift from simple broad index tracking toward a more narrative and strategic approach to investing.

Growing Integration into Institutional Strategies

ETFs are no longer simply tactical tools. They are becoming structural components of institutional portfolios, used to:

Replicate long-term strategic exposures

Reduce management costs

Increase overall portfolio liquidity

Insurers, pension funds, and central banks view them as an optimization lever, particularly in a context of volatile rates and increased regulatory constraints.

Digitalization of Distribution

The rise of online platforms, robo-advisors, and neo-brokers has democratized access to ETFs. In France, the number of retail investors active in these products has doubled in one year. This trend is accompanied by increased investor sophistication, as savers seek simple, transparent, and low-cost solutions. Traditional players must adapt their distribution models to meet this new demand, or risk losing ground to digital players.

The Challenge of Sustainability and ESG Regulation

Sustainable finance remains a growth driver, but it is entering a consolidation phase. ESG ETFs, after a phase of enthusiasm, face challenges:

Clarification of selection methodologies

Harmonization of European labels

Increased transparency requirements

Issuers will need to demonstrate the robustness of their ESG approaches to regain investor confidence and meet new regulatory standards.

The Rise of Active ETFs

Long confined to passive management, ETFs are evolving toward hybrid models. So-called “active” or “semi-transparent” ETFs enable managers to combine management flexibility with a listed structure.

This innovation attracts traditional asset managers (Oddo BHF, Crédit Mutuel AM, and OFI AM have launched their first ETFs in recent months), who see it as an opportunity to capture a share of ETF growth without abandoning their management expertise. This trend could blur the boundaries between active and passive management, while intensifying competition on fees and performance.

Conclusion

ETFs continue to transform the investment landscape, offering opportunities and challenges for asset managers, private banks, and life insurers. Their growing popularity and integration into various types of portfolios demonstrate their importance in the current financial landscape.

By 2030, several emerging trends are reshaping the contours of this maturing market. The rise of thematic and sector ETFs, the growth of active and semi-active ETFs, growing integration into institutional strategies, digitalization of distribution, and the challenge of sustainability and ESG regulation are all dynamics to monitor.

These developments demonstrate the ability of ETFs to adapt to the growing needs and challenges of investors. By embracing these trends, market players can not only optimize their investment strategies but also contribute to a more transparent, accessible, and sustainable financial environment.

About the author

Jérôme BARIL Directeur
Jérôme dispose d’une expérience de plus de 15 ans dans des missions de stratégie, organisation et pilotage de projet pour le compte d’Asset Managers, Banques Privées et Compagnies d’Assurance Vie en France et au Luxembourg
contact@valthena.com

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