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Citi Targets Active ETFs in Europe

Through its white label platform, the bank hopes to be a dominant force in Europe’s growing active ETF market.

Photo of a Citibank building
Photo by Scott Webb via Unsplash

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One of America’s largest banks is taking a big leap across the pond. 

Citigroup aims to not only tap into, but steer, Europe’s burgeoning active exchange-traded fund market by launching a new platform for asset managers. A “white label” program will help firms launch their own products and enter the ETF sector. 

Buying ETFs in Europe hasn’t been easy thanks to technology barriers, commissions, and cultural differences, according to Andrew Jamieson, global head of ETF product at Citi. “This allows aspiring ETF issuers to focus on what they do today in the mutual fund world,” he told The Daily Upside. 

Get in the Game

Active ETFs are all the rage in the US, accounting for 30% of all ETF inflows in the first half of 2024, according to Morningstar. But, they’re just getting started in Europe, representing about 2% of total assets. Citi plans to use its white label platform to work with larger, more experienced firms. That goes against the grain for most white label providers that work with smaller issuers. It’s a new market that Citi may be looking to tap into.

European active ETF inflows surged more than 64% from the second to third quarter this year, bringing total assets under management to just under $50 billion, according to London-based white label HANetf. And in a recent survey from the white label provider, more than 90% of investors said they were likely to invest in an active ETF.

Playing Catch Up. Citi isn’t alone in its pursuit of European active ETFs, as plenty of local and US-based players are already eagerly jumping into the fray:

  • This summer, Baader Bank leveraged Goldman Sachs’ ETF Accelerator white label to launch an AI-driven active ETF, the platform’s first European fund.
  • HANetf has helped launch five active ETFs in Europe managed by firms such as Guinness Global Investors and Westfield Capital Management.
  • Some firms are opting for acquisitions to gain a foothold in the active ETF market, like Janus Henderson’s purchase of Tabula and Ark Invest’s acquisition of Rize ETF.

As for the firms still on the sidelines, it can take years to establish a robust ETF offering because the products require different regulatory umbrellas, specialized sales forces, and capital markets capabilities, according to Michael John Lytle, CEO of Tabula Investment Management. “ETFs can scale and democratize fund investing, but they require significant investment by managers,” he told The Daily Upside.