However, the main story from the first half of 2026 isn’t so much the headline flows figure itself, but rather where those flows are actually going and how ETF products are evolving to meet this demand. We see four key trends driving UCITS ETF growth through the second half of 2026: widening investor participation in the ETF market, accelerating active ETF demand, strong growth in fixed income ETFs, and a further evolution in the use of ETFs in portfolio construction.
1) Momentum is intact—but participation is widening
In 2026, the UCITS ETF market’s growth is increasingly defined by broader participation on two fronts. First, the investor base is widening as lower entry barriers boosts retail adoption, supported by the growth of ETF savings plans and “set-and-forget” automation, and investment accounts offering fractional (or micro) investing, and round-up and cashback features. In continental Europe, monthly ETF savings plans reached 15.1 million in 2025 and annual savings-plan volume rose to €22.7 billion , reinforcing the rise of recurring, scalable flows.
At the same time, ETF usage is also widening participation. Flows have continued to broaden into global and European equities, consistent with investors seeking rotation opportunities, incremental diversification, and more balanced regional exposure. This broadening matters for two reasons: first, because it points to ETFs being used more for strategic allocation, not just short-term positioning; and second, it shows that the UCITS ETF market is expanding as investors use ETFs to target multiple objectives, including growth participation, risk diversification, and more deliberate regional portfolio design.
2) Active ETF growth is accelerating, and changing shape
The growing demand for active ETFs remains one of the most important structural trends in the UCITS wrapper. While the market may still be heavily skewed towards passive strategies, active UCITS ETF assets have increased nearly five-fold since 2021. The number of launches continues to build, year over year, with active UCITS ETFs accounting for more than 40% of all active ETF launches in 2025. At the same time, the range of active offerings continues to expand, spanning index-aware approaches, higher-alpha strategies and more explicitly outcome-oriented solutions.
There are multiple factors driving this growth, with investors increasingly using active ETFs to target more controlled risk budgets (such as index-aware investing), greater flexibility in security selection (given the concentration risks present in passive indices), and outcome clarity (such as specific income, volatility, hedged or buffered profiles).
In practice, the move towards active strategies is expanding the role of UCITS ETFs, which are no longer simply used for “beta delivery” but are increasingly providing a full toolkit that investors can employ to deliver more targeted portfolio outcomes.
3) Fixed income is back—and active fixed income looks like the next runway
Fixed income has returned to the spotlight, with the UCITS ETF wrapper increasingly central to how investors implement rates and credit exposure in portfolios. The most notable sub-trend so far this year is the surge in active fixed income ETF flows, which are on track to nearly double last year’s level and now represent more than 12% of all fixed income ETF flows.
The longer-term runway is still substantial. Active fixed income ETFs represent only about 3% of fixed income ETF assets, although over 80% of the broader fixed income market is actively managed . That mismatch captures the opportunity: many investors already believe active adds value in fixed income, and the ETF structure is increasingly seen as a scalable and tradeable way to access active liquidity management, sector rotation and credit selection.
4) Structural shifts: Derivatives-based and outcome ETFs
Another notable development in the UCITS ETF market so far this year has been the rising prominence of derivatives-based and outcome-oriented ETFs, which are increasingly changing how investors construct portfolios. While these ETFs remain at earlier-stage of development in Europe than in the US, the UCITS product lineup is expanding and flows are building. This year, for example, equity income strategies investing in global, US, UK and European markets have attracted more than $11 billion in inflows , underscoring persistent demand for yield and downside resilience.
These ETF strategies can deliver exposures (for example, hedging, income or convexity management) that have historically been more difficult to implement consistently in portfolios using the ETF wrapper. As adoption broadens, investor education and fit-for-purpose use will be essential, including clear objectives, scenario awareness, and a solid understanding of cost and payoff mechanics.
Looking forward through 2026 and beyond
The trends we’ve identified in UCITS ETFs look set to continue to shape the market in the second half of the year, supported by broadening equity participation, renewed fixed income engagement and the continued maturation of active and outcome-oriented offerings. But there are several developments that we’re also looking out for as some of these key market dynamics evolve.
First, we see continued diversification in regional allocations, as the AI and tech opportunity set broadens beyond the US, and as different regions face differing geopolitical sensitivities. We believe investors will increasingly look to capitalise on tailwinds in emerging markets and European equities, extending the trend we’ve been seeing so far this year in UCITS ETF flows as investors move away from US equities.
We also expect to see more entrants to the market, and more demand for active strategies. While 2025 was a record year for new ETF entrants, and the number of active ETFs launched in 2025 was more than eight times the amount launched in 2020, we expect to see this momentum continue with more active managers joining the ETF market. We also expect to see more issuers expanding their active product ranges beyond “index-aware” solutions to offer higher alpha strategies. This broadening of the active ETF market in Europe will mean expanded choice for investors.
Finally, we expect the growth of retail to be a big theme. Retail participation is becoming a big driver of UCITS ETF growth, and is one of the clearest dynamics to watch in the second half of the year. Savings plans are scaling across Europe, pushing ETF usage towards default, recurring allocations rather than one-off trades. The open question is whether education and product framing can keep pace as more retail investors adopt ETFs. However, over time greater retail participation matters as much as any single allocation trend because it can anchor flows through different market regimes.
Learn more about the trends and dynamics in the European ETF market in our Q3 Guide to ETFs.