European ETF and ETC Industry Hit Record High Inflows in 2024

European exchange-traded funds (ETFs) and exchange-traded commodities (ETCs) gathered EUR 86.0 billion of flows in the fourth quarter of 2024, up from EUR 63.4 billion in the third quarter. That’s a record-high in the quarterly series. Total flows in the year 2024 amounted to EUR 246.8 billion, up from EUR 145.4 billion in 2023 and well above the previous annual high of EUR 159.0 billion in 2021. Assets under management in ETFs and ETCs amounted to EUR 2.18 trillion at the close of 2024. That accounts for a 33% increase in the year from EUR 1.64 trillion in 2023. IShares topped the annual flows league table with EUR 84.4 billon, followed by Xtrackers with EUR 36.0 billion and Amundi with EUR 27.5 billion.

This article is adapted from the recent report published by Morningstar Manager Research. The Morningstar European ETF and ETC Asset Flows report is available to download for free.

Assets under management rose by 8.4% in the quarter and 33% in the year to close to EUR 2.18 trillion, a new record-high for the European ETF and ETC market. Assets in equity ETFs totaled EUR 1.55 trillion, up 38.4% from EUR 1.12 trillion at the end of 2023, and account for 72% of all assets invested. Meanwhile, assets in bond ETFs grew by 15.7% to EUR 441 billion from EUR 381 billion in 2023 and account for 20.2% of all assets invested.

Investors showed a strong preference for US equity exposure in the fourth quarter. Donald Trump’s electoral victory further fueled the strong momentum enjoyed by the market throughout 2024. ETFs in the US large-cap blend category, which includes funds tracking highly popular benchmarks such as the S&P 500, attracted flows of EUR 37.6 billion in the fourth quarter.

Thematic ETFs saw outflows of EUR 1.1 billion in 2024, the first year of disinvestment in the past decade and a far cry from the highs of 2020-21, when annual flows averaged EUR 10 billion. ETFs tracking the energy transition theme led the outflows, while those tracking the security and AI & big data themes were in demand.

Assets in thematic ETFs totaled EUR 37.8 billion at the close of 2024, up from EUR 34.3 billion in 2023. The bulk of assets remain invested in the technology and physical world theme groupings.

In 2024, there was no shortage of market-moving events, especially in the last quarter. The year was marked by continuing geopolitical tensions in Ukraine and the Middle East, the return of dovish monetary policy in major developed markets, and Donald Trump's election victory. Despite them, investors continued to show positive sentiment and poured EUR 459.6 billion into long-term Europe domiciled funds (EUR 56.2 billion in December).

With EUR 35 billion of net new subscriptions, December 2024 was the third-best month on record for Europe-domiciled passive long-term funds. Overall, last year, passive funds took in EUR 307.5 billion, hitting a new record high. Global equities declined in December (negative 2.4%) but were able to close 2024 up by 17.5% (in US dollars), marking the second consecutive year of double-digit returns. Other broad category groups performed as follows:

• Equity funds attracted EUR 30.2 billion in December and EUR 182.1 billion in 2024.
• Fixed-income strategies had EUR 23 billion of net inflows in December and EUR 336.4 billion in 2024, the second-best yearly result ever.
• Allocation strategies closed the fourth quarter in positive territory, after 17 months of net redemptions, taking in EUR 4 billion in the fourth quarter.
• Money market funds attracted EUR 235.8 billion in 2024, the second-best year on record.

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