Europe’s exchange traded fund market may have matured across its core equity and fixed income segments, but the competitive battleground is shifting. As ETFs become more deeply embedded in advisory platforms, discretionary mandates and institutional portfolios, attention is moving away from the wrapper itself and towards the infrastructure that supports it.
In an interview with Paperjam, Lisa Backes, deputy chief executive and board member at Luxembourg-based Hauck & Aufhäuser Fund Services, argues that the next stage of growth will be shaped less by product proliferation and more by operational strength, integration and the ability to scale efficiently across jurisdictions. In her view, active ETFs are gaining momentum, white-label platforms are lowering barriers to entry and both Luxembourg and Ireland are likely to remain central to the European market’s development.
That shift, however, may also bring a tougher commercial environment. Backes expects further growth and new entrants in the near term, but says consolidation is likely as the business becomes more scale-driven and infrastructure-heavy. For providers seeking to expand in Europe, the challenge is no longer simply launching an ETF but building a platform that can support long-term growth.
Kangkan Halder: What are the biggest changes you are seeing in the European ETF market right now?
Lisa Backes: In many of its core segments, the ETF market has reached a clear level of maturity--particularly in liquid equity and fixed income. The processes are standardised, the regulatory framework is well established, and the market structure works reliably.
What’s changing now is the perspective. ETFs are no longer viewed in isolation. They are increasingly embedded in broader investment processes--whether in advisory platforms, discretionary mandates or institutional portfolios. At the same time, the focus is shifting away from the individual product towards the infrastructure behind it. That’s where we see the real differentiation emerging going forward.
Is there any specific reason managers are moving from traditional fund structures into ETFs?
I wouldn’t frame it as a simple shift from one product to another. It’s more a change in how investment strategies are delivered. ETFs offer a level of liquidity, transparency and operational efficiency that is hard to replicate in traditional fund structures.
For asset managers, this opens up new possibilities--especially when it comes to distribution and scalability. Investors, on the other hand, value the clarity and flexibility. So, in many ways, it’s a structural evolution rather than a competitive displacement.
How do you judge whether active ETFs are becoming a genuine growth market in Europe?
We are clearly seeing strong momentum in active ETFs. They address a very specific need: combining active management with the structural advantages of ETFs.
What makes them particularly attractive is how easily they fit into existing investment frameworks. You get daily liquidity, transparency and tradability, while still allowing for active decision-making. That combination is resonating with both institutional investors and wealth managers, so I would definitely consider this a sustainable growth area.
What still makes Luxembourg competitive in ETFs?
Luxembourg continues to benefit from its stability, its regulatory expertise and its strong international distribution network. Those are structural advantages that remain highly relevant.
In recent months, Luxembourg has taken targeted measures to strengthen its position particularly for active ETF and to enhance its appeal relative to Ireland. Examples include the tax exemption for active ETFs--the subscription tax (“taxe d’abonnement”) has been abolished and the relaxation of transparency rules: the rules for semi-transparent ETFs have been relaxed.
Is Ireland a challenge? If so, why?
I wouldn’t describe Ireland as a challenge. It’s a very strong ETF domicile in its own right, with a well-established ecosystem and high international recognition.
In reality, we see the two jurisdictions as complementary. Many successful setups combine Luxembourg and Ireland to leverage their respective strengths.
Do you think more ETF business will shift from Luxembourg to Ireland?
Not in a one-directional sense. Both domiciles will continue to grow.
What we are seeing instead is a stronger focus on cross-border structures that combine efficiency, regulatory robustness and market access. Those setups are becoming increasingly important for scaling ETF strategies across Europe.
What is a white-label ETF platform, and what problem does it solve for asset managers?
A white-label platform essentially provides the operational backbone for launching and running ETFs. It covers everything from trading and custody to reporting and regulatory processes.
For asset managers, this removes a significant barrier to entry. They don’t need to build the entire infrastructure themselves and can instead focus on what they do best--developing investment strategies.
Does it help ETFs get to market faster? If so, how?
Yes, absolutely. One of the main advantages is speed. If you build on an existing platform, you can rely on established processes, regulatory approvals and distribution channels.
That makes the launch process much more efficient and ensures that the ETF is operationally robust from the outset.
Does white-labelling risk creating too many similar ETF products?
It’s a valid question, especially in a growing market. But I think the real differentiator is no longer the number of products.
What matters is how well a product is embedded in investment processes and how reliable the underlying infrastructure is. White-label platforms enable access--but they don’t replace the need for strong, well-defined strategies.
In your opinion, what could ETF growth look like over the next three to five years?
In the near term, we expect continued growth and new entrants. The market is still expanding and attracting a lot of attention.
Over time, however, consolidation is likely. The ETF business requires scale, investment and operational strength. Not every provider will be able to sustain that.
Looking ahead, success will depend less on costs or product breadth alone and more on operational reliability, infrastructure and integration. The providers that can position ETFs as part of a broader, scalable ecosystem will be the ones shaping the market in the years to come.
