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Welcome to the June Edition of Xtrackers Spotlight!
When we last wrote about Active UCITS ETFs in June 2025, the segment was still finding its footing in European portfolios. Since then, assets have grown to €85 billion (see charts below) – more than 60 percent above the end-2024 level but still accounting for only three percent of total UCITS ETF assets.[1] With that in mind, three questions strike us as especially worth exploring: how has the market changed, where is the next leg of growth coming from, and what does a broader landscape mean for product selection?
Broader offering of UCITS Active ETFs meets a distinct demand picture
Around 45 asset managers now offer active UCITS ETFs in Europe – roughly three times the number active in 2021.[2] Active strategies also accounted for around 36 percent of all UCITS ETF launches in 2025, up from about 23 percent the year before.[3] The product universe has visibly widened, but is this mirrored by demand?
Investor flows have, in fact, remained concentrated, but early signs of broadening use cases are emerging. Enhanced equity strategies – those with controlled tracking error and a benchmark-aware construction – continue to dominate institutional adoption. This pattern is consistent with the framework we set out in 2025: active ETFs gain traction where they serve a clear purpose — capturing alpha, engineering targeted outcomes such as income or downside protection, or accessing specialised exposures that are hard to reach otherwise.[4] Traditional, high-conviction active equity strategies, by contrast, remain thinly represented in the Active UCITS ETF space so far. This is not surprising since the ETF wrapper does not solve the core challenges faced by traditional active managers around consistent alpha generation. That said, initial signs of momentum are building with many traditional active managers expanding into the UCITS ETF market. This makes manager selection as well as ETF-platform and eco-system due diligence even more crucial going forward.
Fixed income is getting more attention
While equity strategies still account for the bulk of active UCITS ETF assets (see chart above), fixed income has recently become a major growth engine of flows. The fixed income share of net new active ETF flows has roughly doubled, from around 19 percent in 2024 to close to 40 percent in the first quarter of 2026 (see chart below).[2] We don't see this as a short-term phenomenon, since fixed income is particularly conducive to active management with inefficiencies that discretionary managers can potentially capture.
This is also visible in recent flow data: In the first quarter of 2026, discretionary fixed income Active UCITS ETFs attracted around €2.5 billion in net new assets — more than fifteen times the €158 million that went into systematic fixed income peers. Quite the opposite picture presents itself when looking into active equity strategies, where systematic took in around €3 billion, well ahead of discretionary equity at around €870 million.[5]
Fixed income momentum is broadening beyond short duration
Assets under management of active fixed income ETFs, by segment (2021–Q1 2026)
Source: DWS International GmbH, Trackinsight, May 2026. Based on classifications from DWS International GmbH.
Three factors driving the next leg of growth
While overall growth has continued to accelerate, the absolute levels are still low (see chart 1), and we believe there is still plenty of room to go. Looking at today's investment landscape, we see three forces that could amplify the momentum for active UCITS ETFs:
1 Broadening institutional use
Funds of funds, discretionary managers, and smaller institutional buyers are likely to adopt active ETFs more widely, using them as liquid, transparent building blocks across both core and satellite allocations.[6]
2 Fixed income catch-up
Investor interest in active fixed income still runs well ahead of actual usage, leaving room for adoption to build over several years.[5]
3 Retail adoption through digital platforms
Self-directed retail flows via digital platforms continue to be concentrated in passive ETFs for now. However, any inroads of active strategies into this fast-growing distribution channel would most likely be via the ETF wrapper and present a large potential opportunity.
A growing product offering meanwhile raises the stakes on selection. Which product best suits the respective investment goals and requirements? We, therefore, created a simple guidepost for active ETF selection: defining the portfolio role, selecting the strategy that fits it, validating the wrapper, and assessing how a strategy behaves under stress.
Four step framework for selecting the right active ETF
From defining the portfolio role to selecting the strategy, validating the wrapper, and assessing behaviour under stress
Source: DWS International GmbH, May 2026.
For our framework on the use cases for active ETFs, see last year's Spotlight (upon request from the Xtrackers team) and our research paper.