Record Inflows In European ETFs in Q2-2024

The European exchange-traded funds (ETFs) and exchange-traded commodity (ETC) market gathered $57.7 billion of flows in the second quarter of 2024, up from $49.09 billion in the previous quarter, the highest quarterly figure on record, according to data from Morningstar’s “European ETF Asset Flow Update for Q2 of 2024.”

The data also revealed that assets under management grew by 5.2% in the quarter to $2.07 trillion from $1.97 trillion and the equity strategies gathered $44.18 billion of flows in the second quarter, up from $40.25 billion in the first quarter. Global and US large-cap equity funds remained the most favoured market exposures.

The bond ETFs attracted $12.76 billion of flows in the second quarter, up from $10.07 billion in the previous period. Investors used the iShares France Bond ETF to express one-off tactical views on political risk ahead of the first round of parliamentary elections.

However, environmental, social, and governance ETFs gathered $5.13 billion in the second quarter, down from $8.29 billion in the first. Flows into ESG strategies accounted for just 9% of total flows into ETFs in the second quarter, down from 17% in the first quarter.

Active ETFs gathered $4.47 billion in the second quarter, up from $2.29 billion in the first, and accounted for 7.7% of all flows into ETFs in the period.

Coming to mergers and acquisitions, Janus Henderson, a leading provider of active bond ETFs in the US, acquired the boutique ETF provider Tabula to gain a foothold in the European market. DWS has announced plans to expand its suite of active ETFs to capitalise on growing demand.

Commodity ETCs and ETFs recorded outflows of $2.29 billion. This was the fifth consecutive quarter of disinvestment. Despite this, assets grew to $121.62 billion from $116.5 billion in the first quarter, driven by the rise in gold prices to record-high levels.

The strategic-beta ETFs gathered $599.93 million of flows in the second quarter. The equity market dip in the early part of the quarter prompted interest in value strategies, but there were further outflows from risk-oriented funds.

While thematic ETFs gathered $250.88 million in the second quarter, down from $381.77 million in the first quarter. The group of technology thematic funds saw outflows of $327.24 million, with a significant slowdown in money going into artificial intelligence ETFs.

IShares gathered $23.56 billion of flows in the second quarter and topped the providers’ quarterly flows league. Most other main providers closed the quarter in positive terrain, and there was little movement in terms of their overall market share.

Active ETFs Dominate

Jose Garcia-Zarate, Associate Director at Morningstar and author of the report, said that active ETF inflows have dominated the headlines in the US, but in Europe, Middle East and Africa, record flows have been driven by ongoing interest in mainstream passive global and US large cap equity exposure. Despite a market dip in early Q2, equity strategies added $44.18 billion in flows, of which $3.05 billion went to active ETFs.”

He added: “Active managers are ramping up activity in the active ETF space in Europe, with Janus Henderson acquiring Tabula and DWS announcing expansion plans into this space. ESG ETFs continued to see inflows decelerate, with their share of total ETF flows falling from 17% in Q1 to just 9% in Q2.”