European exchange-traded (ETF) fund flows totalled €247bn, up from €145.4bn in 2023 and well above the previous annual high of €159bn in 2021, according to Morningstar's review for the fourth quarter of 2024 and full year.
Assets under management in ETFs totalled close to €2.18trn at the close of 2024. This was a 33% increase in the year from €1.64trn in 2023.
Jose Garcia-Zarate, senior principal of passive strategies at Morningstar, said: “2024 was the strongest year on record for the European ETF industry, with flows totalling €247bn.
"Equity ETFs saw EUR 197.2 billion in inflows, driven by a strong preference for US equity exposure, particularly after Trump’s victory. In Q4, US large-cap blend ETFs attracted €37.6bn, with the “Trump trade” also extending to smaller market caps. As Trump’s inauguration nears, investors are betting that his protectionist agenda will provide a further boost to valuations.
“Active ETFs have also grown significantly, with inflows reaching €19.1bn in 2024, up from €6.7 bn in 2023, and accounting for 7.7% of total ETFs, up from 4.6% in 2023. Assets in active ETFs rose to €54.4bn from €29.6bn in 2023, representing 2.5% of total ETF assets.
“In contrast, the proportion of total flows into ESG strategies declined further. In 2024, only 11% of all flows into equity ETFs in Europe were directed to ESG strategies. This was down from 34% in 2023 and 60% in 2022.
"Underperformance relative to mainstream propositions and uncertainty around regulations have been the key driving factors in the decline. Alongside this, thematic ETFs saw €1.1bn in outflows during 2024, the first year of disinvestment in the past decade. ETFs tracking the energy transition theme led the outflows, while those tracking the security, AI and big data themes were in demand.”
Flows into equity ETFs amounted to €197.2bn in 2024. Investors showed a strong preference for U.S. equity exposure. The combined flows into the US large-cap blend and Global large-cap blend categories accounted for 70% of all flows into equity ETFs in Europe in the year. Mainstream US index equity exposure dominated. This is one of the few areas where synthetic ETFs are making a comeback.
Flows into bond ETFs totalled €47.4bn in the year 2024, down from €57.3bn in 2023. Investors retained a bias for short duration strategies.
Commodity ETCs and ETFs saw outflows of €7.4bn in 2024.
Flows into ESG ETFs in 2024 amounted to €32.4bn, down from €42.8bn in 2023. The proportion of total ETF flows into ESG strategies has declined abruptly since 2022.
Active ETFs gathered flows of €19.1bn in 2024, up from €6.7bn in 2023, and represented 7.7% of all flows into ETFs in the year. Assets in active ETFs rose to €54.4bn from €29.6bn in 2023 and account for 2.5% of assets invested in ETFs.
JP Morgan strengthened its role as leading provider of active ETFs in Europe with a market share of 54.6%.
iShares topped the annual flows league table with €84.4bn, followed by Xtrackers with €36bn Amundi with EUR 27.5 billion. iShares also remains the top provider in Europe with a market share of 42.2%. Amundi retained second spot with a share of 12.4% and Xtrackers is third with 10.9%.
Thematic ETFs saw outflows of €1.1bn in 2024, the first year of disinvestment in the past decade. ETFs tracking the energy transition theme led the outflows.
