Despite market uncertainty towards the end of the quarter, the proportion of total ETF flows into equities in (80%) remained in line with the 2024 average.
However, the data revealed a pivot away the US towards Europe, reveals Invesco in its latest European ETF snapshot for Q1 2025.
The report highlights a record-breaking quarter for the European ETF market, with net new assets (NNA) reaching $93bn in Q1. This surpasses the previous high of $91bn recorded in Q4 2024.
Across all categories, European-exposed ETFs attracted record $19.4bn of inflows, and accounted for almost a fifth of ETF NNA in Q1, ranking it as the largest single category for flows. This was primarily driven by demand for equities, with broad European equity products attracted $11.4bn of inflows, whilst German equity ETFs alone secured $5bn.
Concurrently, appetite for US equities fell, with $2.2bn of outflows in March taking the total for the quarter to $4.5bn, less than 10% of the record level seen in Q4 of last year.
Gold was the big winner in the commodity asset class. Flows into gold ETPs have been positive for the past four months after being largely absent for most of the gold price rally before then. Gold was the best-performing asset in Q1 with a 19% return, driven by the allure of its perceived "safe haven" characteristics as equity markets fell and the economic outlook became increasingly uncertain.
“Amid the market volatility since April, it may seem odd to look back at Q1, but valuable insights can be drawn from how investors positioned themselves before the most recent tariff-induced market gyrations.” said Gary Buxton, head of EMEA ETFs at Invesco. “The valuation case for European equities remains supportive, and growing concerns over concentration risk amongst Global and US indices could prompt investors to continue looking to Europe to diversify.”
“Similarly, so long as uncertainty persists, the case for gold will remain strong. Gold has demonstrated low correlation with equities and other risk assets, and also tends to hold up well during times of increased equity market volatility (in risk-off conditions) and uncertainty."