The ETF and exchange-traded commodity (ETC) market witnessed inflows totalling €44.5 billion. While this is a slight dip from the €47.4 billion recorded in Q4 2023, the assets under management surged to a new high of €1.81 trillion, marking a 10% increase.
According to data provided by Morningstar, Equity ETFs attracted €36.8 billion, with investors showing a preference for US equity exposure, both in standalone and global developed index offerings. However, value equity strategies and German equities were less favoured during this period.
European ETFs creep up to new record AUM despite market falls
On the other hand, bond ETFs experienced a slowdown, with inflows decreasing to €8.8 billion from €14.1 billion in Q4 2023. The data providers attributed this decline to “investors’ recalibration of rate cut expectations”.
ESG ETFs, though still significant, saw a sharp drop in inflows to €7.1 billion from €13.8 billion. This segment accounted for 16% of total flows, down from 29% in the previous quarter, as “iinvestors prioritised mainstream U.S. and global developed equity exposures”.
Active ETFs gained €2.1 billion, and iShares made headlines by debuting in this space with two new equity income products. Commodity ETCs and ETFs, however, faced outflows of €2.2 billion despite a rise in gold prices, the primary asset in this segment.
Strategic-beta ETFs experienced outflows of €1.5 billion, primarily due to disinvestment from value and risk-oriented strategies. Thematic ETFs bounced back, recording inflows of €350 million, with social themes being the most favoured.
Europe’s ETF market to hit €2.5trn by 2030 – Lipper
In terms of market share, iShares led the pack with €14.1 billion inflows, followed by Xtrackers (DWS) with €8 billion and Amundi at €5 billion. Despite a slight dip, Xtrackers saw its market share grow to 10.6%, while Amundi remains the second-largest provider in Europe with a share of 12.6%.
Jose Garcia-Zarate, associate director of passive strategies, Morningstar, commented: “ESG appears to be going through a period of existential crisis as flows, while still positive in absolute terms, dwindle as a proportion of total flows, particularly within equity. It appears some investors forsake the long-term, fatigued by prolonged underperformance. Additionally, geopolitical uncertainties and the upcoming US election propel a tilt towards mainstream investments.”
