ETF investors in Europe rotated into European equities in February 2025, pulling funds from US strategies amid concerns over stretched US stock valuations and uncertainty around President Donald Trump’s policies, according to asset manager Amundi’s data.
In a reversal of 2024 trends, nearly €10 billion flowed into European equity Ucits ETFs during the month, while €400 million was withdrawn from US-focused ETFs.
Overall, European Ucits ETFs attracted €33.5 billion in February, a 16% increase from January 2025, and more than double the inflows recorded in February 2024, highlighting strong investor demand for ETFs despite broader market uncertainties. Equities remained the top choice, bringing in €24.3 billion, while fixed income strategies added €8.5 billion.
European equities alone accounted for nearly one-third of total inflows, with €9.6 billion allocated, followed by €6.9 billion to global indices. Financial sector ETFs attracted €1.7 billion, while IT strategies gained €900 million despite ongoing valuation concerns. Industrials and materials ETFs also saw inflows, with €500 million and €200 million respectively, as investors looked to benefit from the European Union’s push for increased defence sector spending.
Meanwhile, investors reduced exposure to equal-weighted strategies, withdrawing €400 million, while minimum volatility ETFs added €400 million, reflecting a defensive positioning. Income-focused ETFs also attracted €500 million as investors sought stable yield in an uncertain market environment.
ESG-themed ETFs saw mixed flows, with under €1 billion of net inflows. While investors withdrew €3.2 billion from US ESG strategies, they allocated €2 billion to European ESG funds and €1.2 billion to global ESG indices. This suggests a broad rotation away from US assets, possibly due to concerns over President Trump’s anti-ESG stance, according to the researchers.
In fixed income, European Ucits ETFs added €8.5 billion, with a preference for investment-grade corporate bonds, which drew €3.4 billion. Government bonds attracted €2.8 billion, while high-yield ETFs gained €800 million, reflecting demand for riskier debt amid the search for yield.
Investor interest in government bonds was evenly split between euro- and US dollar-denominated debt, gaining €1.4 billion and €1.1 billion, respectively. However, within US dollar debt, investors showed a preference for short-dated bonds, adding €900 million, while selling €100 million of long-dated paper, likely due to concerns over Trump’s proposed tariffs and inflation risks.
Fixed income ESG ETFs gained €400 million, evenly split between government and investment grade corporate debt. This indicated continued but cautious interest in ESG themes within the bond market, according to Amundi.
