Jason Xavier, Franklin Templeton ETF capital markets head of EMEA & Asia, said in a report that 2025 was a “pivotal” year for ETFs in Europe as they are now firmly embedded across portfolio construction for retail, advisory and institutional investors.

He highlighted that ETF usage across Asia has also reached record levels. In addition, Latin America is experiencing its strongest period of engagement to date, with ETFs increasingly used as long-term allocation vehicles.

“The next major leg of global ETF growth will likely be led by Asia and Latin America,” Xavier added.

Active ETFs

Xavier also predicted that active ETFs are entering a critical phase of their development as the past few years have demonstrated that active strategies can exist within an ETF structure.

“The focus now shifts to scale, consistency and the ways in which these products behave across different market environments as the next wave of adoption should depend less on product novelty and more on repeatable delivery,” he added. “In our opinion, the winners will be those that can pair clear, persistent alpha hypotheses with robust implementation and trading design.”

Eric Qian, business manager at Cboe Global Markets, said in a report, A Year of Growth and Innovation for U.S. Exchange Traded Funds, that over 83% of U.S. ETFs launched last year were active. He said the ETF space was marked by notable partnerships, as well-known investment managers combined ETF distribution prowess with institutional sub-advisory capabilities

Qian gave the example of JPMorgan Asset Management launching the JPMorgan Active High Yield ETF in the industry’s largest ever active ETF launch. Wellington Management also came to market in 2025 with active ETFs through partnerships with Vanguard and Hartford.

In Europe Xetra, Deutsche Börse’s segment for ETFs and ETPs, said in a statement it had 399 new listings last year, compared to 281 in 2024. Actively managed ETFs accounted for more than 43% of all Xetra’s newly listed ETFs last year. In 2025, 12 new issuers listed ETFs on Xetra, and 10 of these 12 new issuers were providers of actively managed ETFs.

Stephan Kraus, head of the ETF & ETP segment at Deutsche Börse, said in a statement that the efficiency of the ETF structure is increasingly being recognised in active investment strategies. He added: “More and more providers are recognizing the added value of the exchange as a complementary distribution channel, especially for attracting new, digitally savvy investor groups.”

Thematic ETFs

Kraus highlighted that there was strong demand last year for the themes of defense and mining stocks, as well as precious metals. Defense ETFs became the most-traded theme on Xetra last year, rising 798% to €9.3bn from €1bn in 2024. Assets under management in defense ETFs increased by 570% over the same time period to €14.5bn.

BlackRock’s iShares said in its 2026 Thematic Outlook that thematic fund assets under management have grown 11x over the past decade in the U.S. The report said: “2025 marked the highest flows for thematic ETFs across index & active since 2021 with $68bn+ in flows.”

In Europe the region’s first quantum computing ETF reached $500m in assets in January this year, just eight months after launching in May 2025. The VanEck Quantum Computing UCITS ETF currently invests in 30 companies worldwide, including pure-play companies that generate the majority of their revenues from quantum computing technologies or services, as well as companies that are leaders in the research and development of quantum computers or already apply this technology.

Martijn Rozemuller, CEO of VanEck Europe, said in a statement: “The growing interest in quantum computing and the increasing expectations for commercial applications are reflected in the strong growth of our ETF.”

Moritz Henkel, product manager at VanEck Europe, told Markets Media that the asset manager designed the ETF to capture the whole quantum industry. Therefore, investments are not limited to hardware, but also encompass other aspects such as software and security systems.

“In the thematic area we have been very successful in identifying trends early,” he said.

In Europe VanEck also launched the first semiconductor, the first gaming ETF and the first defense ETF according to Henkel. He expects the growth in the European ETF to continue and retail growth to continue to be important. For example, saving plans including ETFs are becoming more popular in countries including Germany, the Netherlands and the UK.

“Europe is getting closer and closer to the US, which is amazing to see.” Henkel added.

In 2025 Deutsche Börse introduced its Xetra retail trading offering for ETFs and ETPs and extended trading hours for retail investors. Xetra added: “Since its launch in March, orders with a total volume of €3.5bn have already benefited from better execution prices for ETFs and ETPs.”

Fixed income

Henkel also identified fixed income ETFs as an area of growth and said VanEck will continue to add to its suite, including emerging market ETFs, bond ETFs and fallen angel ETFs. He added: “In the end, it’s about finding your target market and offering new ideas that add value to the market.”

Cboe’s Qian described 2025 as the “golden age of fixed income,” as unwinding inflation and real rates supported both investment grade and high yield coupons following years of near-zero rates.

He said U.S. fixed income ETF assets under management increased more than $450bn in 2025 despite perpetuated curve steepening expectations driving over $4.5bn of assets out of 20-year+ Treasury bond ETFs.

“More than 175 new fixed income ETFs launched in 2025, a 25% increase over the amount of fixed income ETF products available in the U.S. market at the end of 2024,” added Qian.

Jason Bloom, Invesco’s head of fixed income ETF strategy, told Markets Media that the market has adjusted to the reality of a different economic regime that the decade following the financial crisis. He said: “The one thing that is unique right is how flat the yield curve is. The risk-reward at the long end of the Treasury curve, is not tilted in investors’ favor.”

Bloom favors instruments or exposures  that provide an attractive yield that are closer to the value of the curve with a five-year maturity or with short to intermediate duration.

“In ETFs there are all  kinds of really interesting floating rate, investment grade corporate bonds exposures that have been to the individual investor in a really efficient liquid format,” he added.

He believes there is still plenty of room for new exposures in fixed income ETFs.

“There is definitely white space for international exposure and niche corners of the market,” said Bloom. “We are going to launch some product in those areas.”

In addition, asset managers can take traditional fixed income exposures, slice them in a different way and apply an active overlay. Bloom said: “I think we’re going to see some really interesting active overlays on top of what used to be passive.”

ETF issuers have accelerated product development in fixed income as financial advisors increasingly find ways to incorporate fixed-income ETFs into their clients’ portfolios, according to consulting firm Cerulli Associates.

In the last three years, more than 300 new fixed-income ETFs were developed according to The Cerulli Edge—U.S. Product Development, 4Q 2025 Edition. Growth has been driven by greater advisor familiarity, a more favorable interest rate environment, and the development of a more diverse set of fixed-income ETFs.

The survey said nearly three quarters, 71%, of ETF issuers identify greater advisor familiarity with fixed income solutions as a top three factor in driving fixed income flows over the next two years.

Kevin Lyons, senior analyst at Cerulli, said in a statement: “Key factors that ETF issuers expect will influence fixed income ETF flows over the next two years include strong innovation in fixed income products, fixed income exposures paying higher yields, and greater advisor familiarity with fixed income ETFs.”