European open-end funds and ETFs gained €188bn of net inflows in the Q2 2026, down from €203bn in Q1, as geopolitical tensions in the Middle East led investors to reassess risk, according to Morningstar.
Fixed income overtook equities as investors’ preferred asset class during the quarter. Bond funds gathered €84.1bn, up from €75.7bn in Q1, while equity inflows fell to €72.4bn from €98.6bn, according to Morningstar’s report.
Investors balanced a defensive approach with appetite for technology and AI-related opportunities. Higher oil prices and inflation concerns led to demand for fixed income, particularly inflation-linked and emerging market bond funds, while strong corporate earnings supported a return to US and global equities.
Allocation funds recorded a third consecutive quarter of inflows above €20bn, while real assets returned to positive territory with €3.7bn of inflows.
Passive strategies accounted for 75% of net inflows. Passive equity funds attracted €89.9bn, while active equity funds recorded €17.8bn of net outflows. In contrast, active bond funds outperformed passive counterparts, attracting €47.6bn compared with €36.6bn.
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US and global large-cap blend equity categories attracted a combined €88.2bn, more than double the Q1 total, supported by strong earnings and enthusiasm for technology companies.
Technology funds gained €11.7bn during the quarter, their strongest quarterly inflows since the first quarter of 2021. Morningstar attributed part of the recovery to the SpaceX IPO. Infrastructure funds also benefited from demand linked to data centres, attracting €3.8bn.
Inflation-linked bond funds recorded back-to-back strong quarters, gathering €2.5bn in the second quarter after €1.9bn in the first, while thematic funds returned to positive inflows for the first time since Q1 2023.
BlackRock topped Morningstar’s European fund flows league table with €36.4bn of net inflows, driven largely by its iShares passive fund range.
