ETFs have evolved from a niche product into an increasingly dominant form of investment – especially among retail investors. They allow global diversification without deep market knowledge. But the real driver goes deeper: investors themselves have changed. Many are now more self-reliant, better informed, and more tech-savvy. They think more „actively“, if you will – but buy passive products. They no longer say: „I want a fund“, but rather: „I want 30% Europe, 20% emerging markets, 50% bonds.“ They implement these allocations via ETFs – digitally, cheaply, directly. That’s a profound transformation in investor behavior.

Yes – and many underestimate how significant they are. Right now we’re seeing a shift back to home markets, at least among European retail investors. While about 30% of ETF inflows in 2024 went into US equities, so far this year it’s only around 8%. At the same time, inflows into European equities have risen to about 25%. The trend is clear: European retail investors are putting more money back into their own market.

First, it’s a reaction to the long-standing overweight in US equities. That tilt was never deliberately chosen, but rather the result of index dynamics. Second, European companies are once again being seen as attractive – whether in terms of valuations, dividends, or geopolitical stability. For retail investors, such a shift happens quickly: someone managing their ETF portfolio on their phone can change allocations in five minutes. For institutions it takes much longer – with advisory committees, asset-allocation boards, due diligence processes. But we’re seeing movement there as well.

The differences between providers in classic indices like MSCI World or Euro Stoxx are marginal – competition there is mainly on fees and execution. What really makes a difference is the ability to identify trends, act quickly and in compliance, and be as easily integrable into digital distribution channels as possible. For example, we launched our Xtrackers ETF on the MSCI World ex USA within just a few weeks – prospectus drafted, listed, and plugged into all major distribution platforms. Not many can do it that fast and that cleanly. That strength is especially valuable for thematic ETFs.

Because it’s still a strong business – and will remain so for some time, both economically and strategically. About 60% of our revenues come from actively managed products. In volatile markets or less liquid segments, active strategies prove their value. Many institutional clients also value direct dialogue with a portfolio manager or active engagement at AGMs. ETFs can’t fully replace that. We don’t see ourselves as an „either-or“ house – we offer both worlds.

First of all, we already implemented major cost cuts at the start of our three-year plan in 2022 – simplifying structures and making significant reductions at the senior management level. That allowed us to save quickly and decisively and then focus on the business. Our focus now is on organic revenue growth. In other words, we aim to improve profitability through operational scaling and strategic growth – not through further cuts to structures or staff. Our earnings-per-share target is 4.50 euros for this year, with around 10% annual growth in each of the two years that follow. If we achieve that, the CIR comes down almost mechanically – without additional savings programmes.

We are investing selectively where scale effects can be realised and where we can drive organic growth: in our alternatives business and in our Xtrackers platform. This is particularly about digital interfaces – ensuring our products are seamlessly integrated into digital distribution channels, which now account for about a third of ETF inflows. At the same time, we keep costs under control by improving our operating model and managing resources more efficiently – not by cutting services.

We’re in a much stronger position today than two years ago. We’ve shown that we can grow organically above the market average, our platform is in place, our share price has doubled. Consolidation must never be an end in itself. Size alone doesn’t mean much if no new capabilities are added. It only gets interesting if a combination provides access to new markets, technologies, or distribution channels. In Asia, for example, we’re not yet as strong organically – that’s a region where we’re also looking at inorganic options.

I can’t comment on specific names, of course. But in general, combining different backgrounds, business models, and client access could make strategic sense. In contrast, a merger with someone who does exactly what we do would be far less attractive. That would be just cost take-out – something you can explain to the capital markets, but not justify strategically.

We took a fundamental look across all levels, including our communications and organisational setup. If you promise sustainability, you need to operationalise it. That’s why we already restructured our sustainability setup two years ago – clearly distinguishing between a strategy team that tracks market developments and feeds them into the strategy process, and independent teams responsible for embedding the strategy in processes and controls. Responsibility for implementing the sustainability strategy now lies with the respective business areas. That was important to strengthen the organisation and clarify accountability.

It’s become more differentiated – also reflecting broader societal shifts. I think there’s no question that climate change is real and that we have a responsibility to respond. But two key insights stand out: first, investors want to decide for themselves how they weight sustainability in their portfolios. And second, very few are willing to accept a noticeable return sacrifice for it. That’s why we offer a broad range of solutions: some strategies that promote sustainability, and others that serve more conventional goals. What matters is that we don’t prescribe how anyone should invest – we provide choice.

Right now we’re mainly using AI as a tool for efficiency gains. It helps us process large volumes of data or produce reports – faster and more accurately than ever before. That’s the first step, comparable to the introduction of Excel in the past. Anyone not using it will lose competitiveness. A possible second step is more effective implementation of investment ideas. Take a fund manager with a clear thesis – say, on the auto industry. AI could help implement it optimally: long stock A, short stock B, add options, hedge currencies, filter for credit quality. It would simulate variants, assess risks, and propose the most efficient solution. That saves time and increases precision.

In the long run – yes, and that would be the true revolution. AI should eventually be able to identify patterns that humans can’t, or at least not as quickly. Good fund managers ask smart questions others don’t. A powerful AI could simulate that: scan information spaces, connect signals, bring in interdisciplinarity, and derive theses no one else has thought of. We’re not there yet – but the direction is clear. And we’re preparing for it.

AllUnity is an answer to tomorrow’s financial infrastructure. As assets become tokenized – moved onto the blockchain, where they can be traded digitally, directly, and around the clock – you also need a digital means of payment: a reliable, regulated, stable digital currency. The EURAU stablecoin, BaFin-regulated and MiCAR-compliant, serves exactly that purpose: it’s not a crypto speculation vehicle, but a payments instrument for digital capital markets.

A lot of what happens in investment today is infrastructure work – settlement of trades, custody, and so on. But in a few years no one will understand why these processes used to take so much time. Once assets are digital, settlement and payment also have to be digital. That’s where huge potential lies. The market sees it too: in the US, the IPO of Circle shows the valuations stablecoin providers can command. Europe is still lagging, but AllUnity is also a bet on Europe’s digital sovereignty.

For us, it’s not about size – it’s about profitability, but above all about relevance to our clients. For example, by becoming their first port of call when they want to invest in Europe – we call that „#GatewayToEurope“. Or by helping them benefit from the future of financial services – through digital distribution, tokenization of assets, or smart use of AI. Over the past few years we’ve shown that we can catch up internationally. Now it’s about moving ahead – and overtaking.