Low fees and liquidity dominate ETF selection across five markets

Across Australia, France, Germany, Italy and the United Kingdom, financial intermediaries are remarkably consistent in what they look for when selecting ETFs and notably divided on what they are prepared to do with active variants. New research from Aureum Y, the research division of Fundamental Group, conducted among financial intermediaries across all five markets, sheds light on selection priorities, active ETF usage patterns and the types of products that advisers and fund selectors consider most likely, and least likely, to feature in client portfolios.

What matters most when selecting ETFs

In the UK, 93% of respondents cite low fees as a primary selection factor, with Australia close behind at 86%, Germany at 83% and France at 69%. Italy is the exception, where liquidity takes first place at 88%, though fees still rank 2nd at 60%.

Liquidity is the other near-universal priority, featuring in the top three across every market: 70% in the UK, 55% in Germany, 57% in France and 66% in Australia. Low tracking difference or error is a stronger consideration with a spot in top three factors in UK (73%), France (63%) and Italy (54%) than in the other markets, suggesting that in these markets, precision of index replication carries more weight alongside cost.

One factor sits firmly at the bottom of the rankings in every market surveyed: service. Despite the investment that asset managers commit to client servicing, it ranks last in Germany (16%), Italy (16%), France (24%), Australia (29%), and the UK (30%). For ETF selectors, the product's mechanics matter far more than the support wrapped around it.

How active ETFs are being used and by whom

The proportion of intermediaries who do not use active ETFs at all varies meaningfully across markets. France has the lowest non-usage rate at 12%, suggesting the strongest adoption, while Germany records the highest at 36%. Australia sits at 21%, Italy at 26% and the UK at 33%.

Cost efficiency versus other active vehicles is the leading use case in France (56%), the UK (45%)  and Australia (42%). In Germany, tactical or satellite allocation leads at 37%, while Italian intermediaries are most likely to use active ETFs to access niche strategies or specialist exposures (39%).

The least popular use case across all markets is liquidity or trading flexibility, cited by just 15% in Italy and 11% in Germany and the UK. Active ETFs are being chosen for their strategic value and cost advantages over other active vehicles, not for their trading flexibility.

ETF likelihood: index holds firm, crypto faces resistance

When intermediaries consider which ETF types they are ‘very likely’ to use in client portfolios, index ETFs retain the strongest conviction across all markets. In Australia, 34% of respondents rate index ETFs as very likely, the highest reading of any market. Germany and France follow at 31% and 28% respectively, with UK at 22% and Italy at 21%.

Gold ETFs were rated as ‘very likely’ to use in four markets (Italy (20%), Germany (17%), Australia (15%) and the UK (11%) while thematic ETFs achieve second place in France (19%), pointing to a somewhat greater appetite for sector-specific strategies in those markets. Active ETFs register a ‘very likely’ rating of 14% in Australia, the only market where they appear in the top three.

At the other end of the scale, crypto ETFs face the steepest resistance. In the UK, 76% of respondents rate them as very unlikely (the highest reading across the survey) and Australia is not far behind at 54%. REIT ETFs draw significant scepticism in continental Europe, with 45% of French, 43% of German and 39% of Italian respondents rating them very unlikely.

The picture that emerges is one of selective pragmatism. Intermediaries across all five markets share a clear hierarchy of ETF priorities - low cost, reliable liquidity, accurate tracking - and are cautiously expanding their use of active variants where there is a clear rationale. Novel or niche categories such as crypto remain a step too far for the large majority.