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Europe Fund Flows: ETF Inflows Keep Increasing in 2026
Despite a worrisome end to March, quarterly inflows have seen a record high.
As the first quarter of 2026 comes to a close, European flows have totaled EUR 101.7 billion.
The European exchange-traded fund and exchange-traded commodities market gathered EUR 9.4 billion in March 2026, a sharp decline from EUR 45.4 billion in February and EUR 46.8 billion in January. Investors sat firmly on the sidelines as geopolitical tensions developed into a full-scale war in the Middle East.
Here, we’ll uncover trends in fund flows across asset classes and ETF providers.
This article is adapted from the recent report published by Morningstar Manager Research. The Morningstar European Open-End and ETF Flows report is available to download for free.
Source: Morningstar Direct. Data as of Dec. 31, 2025.
Bond Fund Inflows Outpace Equities—Again
For the third consecutive year, flows into bond funds exceeded those into equity strategies. In 2025, bond funds netted EUR 359.9 billion in flows, setting a record high in the series.
Capital preservation funds, such as ultrashort-dated bonds, were another favorite with investors in 2025, gathering EUR 92.3 billion of flows. However, the bulk of the money came in the first half of the year when uncertainty and volatility were at their peak.
The Asset Class Split: Passive for Equity, Active for Fixed Income
Active equity funds saw outflows of EUR 40.8 billion, while passive equity funds gathered EUR 227.4 billion in inflows in 2025.
Although an improvement from 2024, this was the fourth year in a row of disinvestment from active equity strategies in Europe. In contrast, passive equity funds saw a slight decline year over year but in keeping with the clear growth trend of the past decade.
The tables turn in fixed income, where active management dominates. Bond active managers have plenty of levers to pull to add value now that monetary policy has normalized.
Flows into active bond strategies in 2025 totaled EUR 310.0 billion, a record high for the decade. Passive bond funds attracted EUR 49.9 billion in flows in 2025.
Source: Morningstar Direct. Data as of Dec. 31, 2025. Passive funds include ETFs and index funds.
Source: Morningstar Direct. Data as of Dec. 31, 2025. Passive funds include ETFs and index funds.
European Equities Become a Refuge as Investors Flee US Stocks
Source: Morningstar Direct. Data as of Dec. 31, 2025.
The main theme in the equity space in Europe was the large rotation out of US equities. The huge bet on US exposure in the wake of the US presidential election, turned sour once President Donald Trump took office in 2025.
Markets were taken by surprise by his approach to international trade policy. Investors responded to this unexpected risk by diversifying geographical exposure, and, perhaps by default, European investors favored the home exposure they had purposely ignored for the best part of the past decade.
On aggregate, European large-cap funds netted EUR 41.2 billion in flows in 2025, compared with EUR 12.0 billion in outflows in 2024.
In contrast, US large-cap funds closed 2025 with EUR 6.2 billion on aggregate, a mere fraction of the EUR 98.3 billion invested in 2024.
Defense Funds Shine as Thematic Funds Post Outflows
Thematic funds recorded EUR 10.1 billion of outflows in the fourth quarter, a modest improvement from the third quarter but contributing to total outflows of EUR 37 billion in 2025.
In the past three years, thematic funds have shed EUR 112 billion in assets.
Consumer-themed funds, classified under the Social thematic bucket, led outflows in the fourth quarter with EUR 3 billion in redemptions, followed by broad thematic strategies with EUR 2.7 billion. Both categories ranked among the largest drivers of outflows in 2025.
Security-themed funds, also part of the Social thematic bucket, were the standout theme of 2025. They attracted EUR 8.6 billion of inflows for the year as investors maintained their appetite for defense and security exposure amid rising geopolitical tensions and increased government defense spending.
Digital economy and digital infrastructure strategies, classified under the Technology thematic bucket, were a bright spot in the fourth quarter. They ranked among the largest inflows for the period with EUR 183 million and EUR 101 million, respectively.
Source: Morningstar Direct. Data as of Dec. 31, 2025.
Digital economy and digital infrastructure strategies, classified under the Technology thematic bucket, were a bright spot in the fourth quarter, ranking among the largest inflows for the period with EUR 183 million and EUR 101 million, respectively.
More on Asset Flows in Europe
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