By Global exchange-traded fund (ETF) assets have topped $22 trillion in 2026, but growth is taking different paths across major markets, with distribution networks and local regulations shaping how fund managers reach investors, a Brown Brothers Harriman (BBH) study found.
The study, discussed at a BBH event in London, examined developments in the United States, Europe, Asia and Latin America.
It identified product innovation as a major feature of the U.S. market, while distribution remains a central challenge in Latin America and a shortage of specialist expertise is hindering new issuers in Europe.
U.S. Market Drives ETF Innovation
The United States remains the world’s most mature ETF market, with actively managed funds accounting for the vast majority of new launches, according to Tim Huver, BBH’s head of U.S. ETF Services.
Active ETFs give portfolio managers discretion over investment decisions, unlike passive funds that generally track an index. Huver said these products were attracting a disproportionate share of net inflows in the U.S. market.
Fund managers are also exploring ways to convert traditional mutual funds into ETFs and introduce different share classes. U.S. tax rules have helped support some of these developments, the study said.
But launching a fund does not guarantee access to investors. Huver said wealth management platforms and large brokerage firms often impose requirements for a performance track record, assets under management and sufficient liquidity.
Those conditions can make it harder for smaller providers to secure distribution, even as the barriers to launching ETFs have fallen.
Latin America Needs Stronger Distribution
In Latin America, fund providers face a different set of challenges. Regulatory, tax and operational requirements vary between countries, making it difficult to distribute products across the region using a single approach.
Daniel Montoya, BBH’s head of relationship management for the Americas, said local partnerships and relationships with market makers were crucial to ETF growth.
Understanding institutional investors and adapting products to individual markets were also important, he said.
Demand for exposure to global ETFs is already substantial in Mexico and Chile, Montoya said, while Brazil has established a retail investor base for locally traded ETFs.
BBH sees scope for further growth, but providers will need to navigate the differences between national markets rather than assume that a product successful in one country will work equally well in another.
Europe Sees Growing Interest in Active ETFs
In Europe, savings plans, investment platforms and pension reforms are helping encourage households to move money into investments, said Andrea Murray, BBH’s head of EMEA ETF Services.
Banks and investment platforms are also working with asset managers on co-branded funds and launching ETFs of their own.
Active ETFs are gaining traction in the region, although they still account for a relatively small share of the European market. Regulatory changes, including developments linked to the proposed Savings and Investments Union, are helping make the structure more attractive to traditional active managers, Murray said.
However, new issuers face operational hurdles.
Murray identified a lack of specialised capital markets expertise as the biggest operational challenge for companies launching ETFs in Europe. Such expertise is needed to manage trading, liquidity and the other arrangements that support a fund’s operation.
Asia’s Markets Follow Different Paths
Asia’s ETF industry is growing, but the region remains fragmented, with investor behaviour and market conditions varying significantly between countries, said Chris Pigott, BBH’s head of Asia ETF Services.
Cross-border programmes connecting mainland China with other markets are creating opportunities for fund providers. Digital distribution is also becoming more important in financial centres such as Hong Kong.
Retail investors continue to influence trading activity, although their preferences differ across the region, Pigott said.
Further ETF approvals in mainland China could open the door to additional growth, he added, although the pace of expansion will depend on regulatory decisions.
Distribution Becomes A Key Factor In Growth
Across the four regions, the study identified distribution as a recurring factor in determining whether ETF providers can build a market for their products.
The findings suggest that product innovation alone may not be enough. Access to brokers, wealth managers, investment platforms and local market makers can determine whether investors can buy and trade a fund efficiently.
Retail investors are also becoming more important to the industry’s expansion, BBH said.
For fund managers seeking to enter new markets, the priorities differ. U.S. providers are operating in a mature market where product development remains a major focus.
European firms are adapting to changes in savings and investment distribution, while Asian providers are exploring cross-border opportunities.
In Latin America, local partnerships remain essential to reaching investors.
