The European ETF industry must be in a good mood currently, as October 2024 marked a new record for monthly inflows, with €28.5bn flowing into ETFs.
These inflows drove the estimated year-to-date net flows up to €195.7bn, which would mark a new record for estimated full year inflows. That said, the strong inflows over the course of October brought my expectations for the estimated full year net flows up to a range between €210.0bn and €230.0bn.
Since equities were the best-selling asset type for the month, it is no surprise that equity classifications were dominating the table of the 10 best-selling classifications for the month. Within this positive environment the inflows in ETFs classified as Equity US marked a new all-time high for estimated monthly net flows at €9.6 bn.
These strong inflows might be caused by the so-called ‘Trump-trade’ or the anticipation of possibly further decreasing interest rates in the US.
Equity Global was the second best-selling classification overall at €6.9bn inflows, followed by Equity Emerging Markets Global at €1.1 bn, as fifth best-selling classification overall, Equity U.S. Small & Mid Cap as number six with €1bn and Equity China as eighth best-selling classification with €900m.
These estimated net inflows are helping the three largest Lipper classifications by assets under management (AUM) to maintain their current positions on the league table.
A more interesting story can be found with regard to the third best-selling classification, Bond EUR High Yield, with €1.6 bn inflows, as it appears European investors have sold the exposure they built last month in Bond EUR Corporates – posting a €1.2 bn outflow – as well as some of their exposure to Bond USD Corporates – which saw €300m outflows – to buy into European high yield bonds. This could be seen as kind of a risk-on move by European investors.
In addition, it looks like European investors still want to take profit from the further inverted yield curves, as Money Market EUR welcomed €1.5 bn, the fourth best-selling classification for the month, and Bond EMU Government Short Term added €600m.
Another way to interpret these inflows in the direction of the short end of the yield curve can be to see these flows as part of a possible portfolio trim, since Bond EMU Government Long Term added €900m and Bond EMU Government added €800m over the course of the month.
More generally, the fund flows for October show from my point of view that European ETF investors are further in risk-on mode and were anticipating a clear result for the US presidential election, as well as further declining interest rates in the US and the EU.
Detlef Glow is head of Lipper EMEA research at Refinitiv.
This article is for information purposes only and does not constitute any investment advice.
The views expressed are the views of the author, not necessarily those of LSEG Lipper or LSEG.
