State Street Investment Management is plotting a substantial push into active ETFs and will become the latest in a long line of managers to enter the European active fray.
The $5.1trn asset manager is not only planning to bring active strategies of its own to the European marketplace but also partner with third-party active shops to co-develop products, a model it has already used widely in the US.
Andrew Keegan, head of product, international at State Street Investment Management told ETF Stream the firm was “responding to client demand by further evolving our product range, with a focus on our active capabilities – both fundamental and systematic.”
State Street is currently developing active ETFs with exposure to areas like global equities, small caps and high dividend paying stocks, the latter designed to complement its passively managed ‘dividend aristocrats’ range.
“We’re also considering how we can further bolster our range, in due course, by complementing our existing products with the development of derivative overlays,” said Keegan.
JP Morgan, Global X, First Trust and BlackRock are the key European players in the derivative overlay space which includes products like covered call ETFs and buffer strategies. UBS is also lining up an offering.
In addition, State Street is working on ETF partnership agreements with third-party active managers including within the realm of fixed income, an area where the firm sees “increasing opportunity”.
State Street has used the partnership model for active strategies in the US most famously with Apollo Global Management on its groundbreaking private credit ETF and hedge fund Bridgewater Associates on a risk parity strategy.
The firm previously told ETF Stream that liquid alt ETFs “represent the next evolution of portfolio construction for European investors”.
At just 3% of total assets under management, active ETFs still represent a small slice of the European ETF pie but their share is growing and accounted for 8% of net inflows during the first half of the year.
But despite the still small scale, 90% of new entrants into Europe’s ETF market in H1 came with active strategies, according to State Street’s 2025 midyear review, which illustrates just where asset managers see the opportunity set.
Nordea, Jupiter and DBi were among the active managers to debut their first ETFs in H1 with offerings from Schroders, M&G, Dimensional and many others expected in the coming months.