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Europe Fund Flows: ETF Inflows Keep Increasing in 2026
Despite a worrisome end to March, quarterly inflows remained strong.
Key Takeaways
- European open-end funds and ETFs gathered EUR 184.2 billion in the first quarter of 2026, up from EUR 154.3 billion in Q4 2025, despite outflows of EUR 18.7 billion in March as war in the Middle East rattled markets.
- Passive funds captured 65% of all flows at EUR 120 billion, though active managers dominated fixed income, attracting EUR 49 billion against EUR 13.6 billion for passive bond strategies.
- Growth-focused and tech equity strategies shed EUR 23.3 billion collectively in Q1 2026, as AI valuation concerns and skepticism over technology spending weighed heavily on investor sentiment.
The first quarter of 2026 delivered a strong headline for European funds, but the detail told a more complex story — a war-driven reversal in March, a deepening rotation away from growth and technology, and a nuanced active-versus-passive divide that played out very differently across asset classes.
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.
The First Quarter Was Strong, Despite Outflows in March
EUR 184.2 billion.
That is how much European open-ended funds and ETFs, excluding money market funds, gathered in the first quarter of 2026. In March, outflows were recorded as EUR 18.7 billion. Despite the fact that the majority of that total quarter amount came through January and February, investors were not spooked by the war in the Middle East. Rather, they are opting to sit firmly on uninvested cash for the time being.
Here’s how the first quarter flows performed by broad asset class.
Flows by Broad Asset Class for the European Open-End Fund and ETF Market (EUR billion)
Source: Morningstar Direct. Data as of March 31, 2026.
Equity funds gathered EUR 95.3 billion, a substantial increase compared with EUR 42.9 billion in the fourth quarter of 2025. The bulk was directed to global large-cap and emerging-market funds, though the latter suffered a setback in March. Growth-style funds remained out of favor.
Fixed-income funds attracted EUR 62.7 billion, down from EUR 90.6 billion in the last quarter of 2025. Emerging-market bond funds, in demand for much of the past 12 months, saw outflows in March.
Assets in European open-end funds and ETFs closed the first quarter at just over EUR 14.0 trillion. In February, assets had reached close to EUR 14.9 trillion, which shows the extent of the capital losses sustained across global markets as a direct result of the war. Assets are now lower than the EUR 14.4 trillion at the end of 2025.
The First Quarter Saw Passive Funds Attracting 65% of All Flows
Active funds gathered EUR 64.1 billion of flows in the first quarter, down from EUR 80 billion in the last quarter of 2025. The bulk of money was directed to fixed-income and allocation offerings, while equity active funds shed EUR 12.7 billion in the period.
Flows into passive funds amounted to EUR 120 billion in the first quarter, up from EUR 74.3 billion in the last quarter of 2025. A staggering EUR 108 billion was directed to passive equity market strategies. Assets in passive equity funds in Europe ended the quarter close to EUR 3.4 trillion compared with EUR 4.1 trillion for their active counterparts.
Total Active and Passive Flows by Quarter (EUR billion)
Source: Morningstar Direct. Data as of March 31, 2026. *Passive funds include ETFs and index funds
Despite the large attention paid to passive funds from equity flows, active continues to be favored for bond market exposure. In the first quarter of 2026, active bond funds, mostly open-end funds but also some ETFs, gathered EUR 49 billion. Passive bond funds attracted EUR 13.6 billion, of which 65% went to ETFs and 35% to open-end index funds.
Growth-Focused Equity Funds Remain Out of Favor
Growth-focused equity strategies shed EUR 23.3 billion in Q1 2026 as investors grew increasingly skeptical of AI-related spending and the valuations attached to technology companies. Software bore the brunt of the sell-off, while hardware and semiconductors held up better — though not enough to prevent Sector Equity Technology from recording its first net outflows in over a year.
Growth-Oriented Equity and Tech Flows Over Three Years (EUR Billion)
Source: Morningstar Direct. Data as of March 31, 2026.
The rotation within equities was as significant as the outflows. Investors did not retreat from the asset class; they moved within it, shifting from growth into broader blend strategies. Global and European large-cap blend together attracted EUR 58.6 billion, suggesting investors were repricing risk rather than abandoning equities altogether.
Thematic Funds Continue Floundering After Suffering 4.1 Billion in Outflows
Although the amount shed was less severe than the EUR 9.1 billion lost in Q4 2025, thematic funds still shed EUR 4.1 billion in the first quarter of 2026. This results in a continued trend of investor interest waning since 2023.
Thematic Open-End Fund and ETF Flows by Broad Theme (EUR billion)
Source: Morningstar Direct. Data as of March 31, 2026.
Broad thematic and technology-themed funds drove the bulk of the outflows, with AI and Big Data strategies swinging from modest inflows in Q4 2025 to net redemptions — a notable reversal given the continued prominence of the theme in the headlines. Physical World funds were a rare bright spot, turning positive for the first time in several quarters and reversing EUR 2.6 billion of outflows from the prior period.
More on Asset Flows in Europe
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