Key Takeaways
- • 30% of European professional investors surveyed by Brown Brothers Harriman plan to allocate to buffer ETFs in 2025, compared to just 10% targeting liquid alternatives—signaling a dramatic shift in defensive strategy preferences despite buffer ETFs' nascent European market presence.
- • 93% of European ETF investors intend to increase exposure to active ETFs in 2025, reflecting a broad institutional pivot toward actively managed strategies and away from passive approaches.
- • Nearly 50% of European investors plan to reduce mutual fund exposure, indicating a structural shift in wrapper preference toward ETF vehicles as investors prioritize liquidity and trading cost efficiency.
- • Liquid alternative strategies, which offer similar downside protection to buffer ETFs through systematic hedge fund approaches like managed futures, are being overlooked by European investors despite new product launches (a managed futures ETF launched in Europe for the first time since 2020).
- • Liquidity and trading costs rank as the top ETF selection criteria for 43% of European investors versus 29% in the US, underscoring regional prioritization of market microstructure over other factors.
Summary
European institutional investors are planning a significant portfolio reallocation in 2025 toward buffer ETFs while simultaneously dismissing liquid alternative strategies, according to the 2025 Global ETF Investor Survey by asset servicing firm Brown Brothers Harriman. The survey of 115 professional European investors reveals that 30% intend to invest in buffer ETFs this year—a substantial commitment to a product category that has yet to generate meaningful inflows in Europe despite substantial adoption in US markets.
Buffer ETFs employ options-based strategies to provide downside protection against equity market losses while maintaining upside participation, making them theoretically attractive during volatile market conditions. However, their appeal stands in stark contrast to investor indifference toward liquid alternative strategies, which offer comparable protective characteristics through systematic approaches such as managed futures. Only 10% of surveyed European investors plan allocations to liquid alternatives, despite product providers' continued confidence in the category; notably, a managed futures ETF launched in Europe in March 2025 marked the first such product launch since JP Morgan Asset Management's strategy closure in 2020.
The survey underscores a broader European ETF market transformation. Active ETFs command overwhelming investor attention, with 93% of respondents planning to increase exposure to actively managed strategies throughout 2025. Concurrently, nearly 50% of investors intend to reduce mutual fund allocations, reflecting a structural preference shift toward the ETF wrapper. This migration is driven partly by regional priorities around market mechanics: 43% of European investors identify liquidity and trading costs as the most critical ETF selection criteria—significantly higher than the 29% preference rate observed in US markets—highlighting Europe's particular sensitivity to execution efficiency and cost management.
The data suggests European investors are selectively adopting risk management tools while consolidating around active management and cost-efficient vehicles, positioning buffer ETFs as a preferred tactical hedge rather than embracing the broader liquid alternatives ecosystem.
Buffer ETFs employ options-based strategies to provide downside protection against equity market losses while maintaining upside participation, making them theoretically attractive during volatile market conditions. However, their appeal stands in stark contrast to investor indifference toward liquid alternative strategies, which offer comparable protective characteristics through systematic approaches such as managed futures. Only 10% of surveyed European investors plan allocations to liquid alternatives, despite product providers' continued confidence in the category; notably, a managed futures ETF launched in Europe in March 2025 marked the first such product launch since JP Morgan Asset Management's strategy closure in 2020.
The survey underscores a broader European ETF market transformation. Active ETFs command overwhelming investor attention, with 93% of respondents planning to increase exposure to actively managed strategies throughout 2025. Concurrently, nearly 50% of investors intend to reduce mutual fund allocations, reflecting a structural preference shift toward the ETF wrapper. This migration is driven partly by regional priorities around market mechanics: 43% of European investors identify liquidity and trading costs as the most critical ETF selection criteria—significantly higher than the 29% preference rate observed in US markets—highlighting Europe's particular sensitivity to execution efficiency and cost management.
The data suggests European investors are selectively adopting risk management tools while consolidating around active management and cost-efficient vehicles, positioning buffer ETFs as a preferred tactical hedge rather than embracing the broader liquid alternatives ecosystem.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.