Estimated net flow numbers show that the European ETF industry enjoyed healthy inflows of €104bn through the first six months of 2024.
Despite the difficult market environment, equity ETFs welcomed €78.2bn inflows, followed by €17.5bn gathered by bond ETFs, while money market ETFs picked up €8.7bn new assets and commodities ETFs added €700m.
Conversely, alternatives ETFs shed €500m while mixed-assets ETFs suffered around €700m net outflows for H1 2024.
Diving into each asset class, Lipper classifications revealed global and US equity ETFs dominated with estimated net flows of €27.6bn and €24.7bn, respectively, through the first six months of 2024.
Since money market products normally play only a minor role in the European ETF industry, it was surprising that the Money Market EUR category welcomed €4.7bn while Money Market USD saw €4.2bn inflows, meaning they were the third and fifth best-selling Lipper classifications for the year so far.
Situated between them was the Equity Sector Information Technology, adding €4.6bn, to be the fourth best-selling Lipper classification over the course of H1 2024.
Following close behind, €3.4bn inflows into Equity Japan might be a sign that Japanese blue chips are back on the agenda of European investors, especially after the NIKKEI 225 marked a new all-time high in February 2024.
However, it is also noteworthy that the vast majority of the estimated inflows into Equity Japan was in ETFs which are related to the MSCI Japan and not the NIKKEI 225. Nevertheless, relatively low inflows into Equity Japan is a sign that European investors do not chase returns.
Elsewhere, European investors looked to tactically play a China recovery, as Equity China saw €400m inflows and Bond CNY added €300m in H1.
European investors also rediscovered enthusiasm for their home market, with Equity Eurozone ETFs adding €2.4bn, Equity Europe €700m, Equity Switzerland €1bn and Equity UK Small & Mid Caps €500m.
Overall, the dominant presence of equity classifications illustrates European ETF investors are currently not focusing on bonds.
That said, Bond EMU Government and Bond Global USD categories welcomed €3.1bn and €2.9bn inflows, respectively, positioning them within the top 10 best-selling Lipper classifications for H1.
Investors also allocated €1.9bn to Bond EMU Government Long Term, €1.5bn to Target Maturity Bond EUR 2020+, €1.5bn to Bond USD Government and €1.4bn to Bond USD Government Short Term.
While buying USD bonds may mean that European investors want to take profit from the higher interest rates in the US compared to the Eurozone, the transaction in EUR bond categories may be a sign that European investors might expect more interest rate cuts from the European Central Bank soon.
Demonstrating this they sold €1.6bn of ETFs in the Bond Emerging Markets in Local Currencies category, €500m from Bond EMU Government Short Term and €300m from Bond EUR Short Term.
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 Refinitiv Lipper or LSEG.
