It looks like 2024 will be another record year for the European ETF industry, as the estimated net inflows into ETFs in Europe stood at (€167.2 bn) at the end of September 2024.
This level of inflows has never been witnessed before in the European ETF industry. Therefore, it is no surprise that the estimated net inflows for the first nine months of 2024 are already higher than the record inflows for the full year 2021 (€161.4 bn).
A view of the estimated net flows at the classification level shows that the inflows over the course of the year 2024 so far are dominated by ETFs classified as Equity Global (€41.1 bn) and Equity U.S. (€40.7 bn).
These classifications lead the table by a large margin as the third best-selling classification Money Market USD witnessed ‘only’ estimated net inflows of €8.9 bn. This classification was followed by Money Market EUR (€8.0 bn).
Since money market products have not been a core asset type in the European ETF industry so far, it is somewhat surprising to see such strong inflows into the respective products.
Equity Emerging Markets Global (+€6.6 bn) was the fifth best-selling classification for the year so far and has become the third largest classification by assets under management (€88.1 bn) overall at the end September 2024.
Given the general fund flows trend in the European ETF industry, it can be concluded that the relatively high inflows into money market products were driven by the still inverted yield curves in the major economies and not by a flight to save havens.
On the other side of the table, Bond Emerging Markets Global in Local Currencies (-€1.9 bn) was the classification with the highest outflows for the year so far. It was bettered by Bond USD Government (€0.9 bn), Equity Canada (€0.9 bn), Equity Theme – Alternative Energy (€0.9 bn), and Equity Sector Energy (€0.8 bn).
Interestingly, Bond Emerging Markets Global in Hard Currencies enjoyed estimated net inflows (€1.7 bn), which may suggest that European investors switched their bond emerging markets exposure from local currencies to hard currencies. Nevertheless, it cannot be said if this assumption is true or not, as the source of flows for ETFs can’t be determined.
Even as the outflows from Bond USD Government were driven by the outflows in September (-€1.4 bn), it is noteworthy that that this classification faced outflows over the course of the last four months (-€2.6 bn overall).
Conversely, Bond EMU Government enjoyed estimated net inflows of €3.6 bn. With regard to the above, I would not assume that the outflows from Bond USD Government were part of the inflows into Bond EMU Government since the risk profiles of these two classifications are too different.
It might be a bit unusual to see Equity Theme – Alternative Energy and Equity Sector Energy together at the bottom of the table. That said, Equity Theme – Alternative Energy has fallen out of favor with European investors and faced outflows in every month of the year so far, while ETFs in the Equity Sector Energy had to face headwinds from a lack of economic growth in major economies around the world and, therefore, a lower oil price.
It is interesting to see that Equity Japan is still posting estimated net inflows of (€1.0 bn) for the year so far despite outflows of €2.6 bn over the course of the last four months, as it seems that European ETF investors take profits after the market turmoil in August.
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.
