The figures underscore the scale of the trend. According to Blackrock, European ETF assets rose from $2.262trn at the end of 2024 to $3.208trn a year later. Over the same period, inflows reached a record $388.9bn in 2025, well above the $273.4bn recorded in 2024.

This expansion has been accompanied by rapid uptake among investors. Europe now counts 32.8m ETF holders, up from 19.3m in 2022. Today, 10% of European adults hold ETFs, compared with 6% three years ago. Their share in portfolios is also rising: they now account for 25% of investments, versus 18% in 2022. At the same time, the product range continues to broaden, with 3,440 ETFs available at the end of 2025.

Within this growing market, however, the hierarchy among financial centres remains well established. Kenneth Lamont, principal at the data firm Morningstar, notes that “the tax advantages of domiciling major core exposures in Ireland rather than Luxembourg are well established,” particularly for portfolios heavily exposed to US equities.

ETF Ucits assets by domicile (€bn)

“This has created a virtuous circle,” adds Lamont. The scale of the Irish market has enabled the development of a robust operational infrastructure, lowering administrative and servicing costs. As these costs fall, the jurisdiction becomes more attractive, drawing new asset managers and further reinforcing its position. This is compounded by a regulatory approach widely seen as proactive. “The Central Bank of Ireland has been proactive in lowering barriers and encouraging product innovation,” strengthening its status as Europe’s leading ETF domicile.

In Luxembourg, some observers view the race as effectively lost and beyond recovery. For these critics, current difficulties stem from an initial lack of foresight. It was a serious miscalculation, they argue: early ETF promoters, who turned to Dublin due to limited local interest, remain there today.

Net assets of ETFs in Ireland and Luxembourg (€bn)

Faced with this lead, Association of the Luxembourg Fund Industry (Alfi) CEO Serge Weyland rejects the notion of a definitive decline. “What I keep hearing is, oh, Luxembourg missed the boat on ETFs. It’s all about Ireland. I would tend to have a more balanced view on this,” he said at a media breakfast in February. The country remains Europe’s second-largest domicile, with close to €500bn in assets. “A number of players have launched ETFs in Luxembourg over the past 18 months or so, and we expect that trend to continue,” Weyland insisted, without specifying whether this concerns only domiciliation or also actual portfolio management.

Above all, positioning is evolving. While Ireland dominates passive ETFs, Luxembourg is highlighting specific areas of expertise, notably in synthetic ETFs. “With synthetic exposure to US equities, there is an exemption from the US tax authorities under which dividends are not taxed,” Weyland explained.

By contrast, physically replicated ETFs are subject to dividend taxation of 15% in Ireland and 30% in Luxembourg. In certain configurations, particularly on indices such as the MSCI World—which comprises roughly 30% US equities—these mechanisms can enable Luxembourg-domiciled ETFs to deliver stronger net performance.

“Our toolbox is now complete”

Recent shifts in flows are also playing a role. Over the past 12 months, significant investments have moved out of the United States towards Europe, Asia and emerging markets, which have posted the strongest returns. Part of these flows has benefited ETFs domiciled in Luxembourg, particularly as, for certain indices such as the MSCI Europe, tax conditions are equivalent across jurisdictions.

Alfi is also betting on the rise of active ETFs. “These are actively managed funds that are then distributed in the ETF format,” Weyland said. This structure opens up new distribution channels, notably via digital platforms and online brokers. Deputy CEO Corinne Lamesch added that “the big trend will be that there will be active ETF share classes within standard mutual funds, so standard active funds.” This trend is already gaining traction in the United States.

To support this repositioning, Luxembourg has adapted its framework. Exemption from subscription tax for active ETFs, clarification of portfolio disclosure rules by the Financial Sector Supervisory Commission (CSSF), simplified approval procedures and improved operational efficiency: “I think our toolbox is now complete and is as good as it can get,” Lamesch said.

The infographics accompanying this article were produced for the Asset Management supplement of Paperjam magazine (May 2026 issue, published on 29 April). This content, initially designed for the print edition, is made available online to enrich Paperjam’s archives.