The European ETF and exchange traded commodity market gathered €52.9 billion in the second quarter of 2024, an increase from €45 billion in Q1 2024, data has shown.
This marks the highest quarterly figure on record driven mainly by US equity appetite and rebounding fixed income flows, according to Morningstar’s European ETF Asset Flow Update for Q2 2024.
Key takeaways from the report included a 5.2% growth in assets under management, reaching €1.9 trillion from €1.81 trillion. Equity strategies led the way, attracting €40.5 billion inflows, up from €36.9 billion in the first quarter. Global and US large-cap equity funds remained the most favoured market exposures.
Bond ETFs saw a rise in flows to €11.7 billion, up from €9.2 billion in Q1. Notably, investors used the iShares France Bond ETF for tactical views on political risk ahead of parliamentary elections. Meanwhile, Environmental, Social, and Governance (ESG) ETFs gathered €4.6 billion, a decrease from €7.6 billion in the previous quarter. ESG strategies accounted for only 9% of total ETF flows in Q2, down from 17% in Q1.
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Active ETFs experienced growth, with flows reaching €4.1 billion, up from €2.1 billion in Q1, representing 7.7% of all ETF flows. Janus Henderson’s acquisition of Tabula and DWS’s expansion plans reflect the increasing interest in active ETFs in Europe.
Commodity ETCs and ETFs recorded outflows of €2.1 billion, marking the fifth consecutive quarter of disinvestment. Despite this, assets grew to €111.5 billion from €106.8 billion, driven by rising gold prices. iShares led the market with €21.6 billion inflows, topping the providers’ league. Most other main providers ended the quarter positively, though Legal & General saw further outflows of €1.2 billion, primarily from ESG and thematic ETFs.
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Jose Garcia-Zarate, associate director at Morningstar and author of the report, commented: “Active ETF inflows have dominated the headlines in the US, but in Europe, Middle East and Africa, record flows have been driven by ongoing interest in mainstream passive global and US large cap equity exposure. Despite a market dip in early Q2, equity strategies added €40.5 billion in flows, of which €2.8 billion went to active ETFs.”
He added, “Active managers are ramping up activity in the active ETF space in Europe, with Janus Henderson acquiring Tabula and DWS announcing expansion plans into this space. ESG ETFs continued to see inflows decelerate, with their share of total ETF flows falling from 17% in Q1 to just 9% in Q2.”
