European ETFs hit record inflows in 2025 amid changing investor preferences

The latest data from the European Fund and Asset Management Association (EFAMA) underscores a buoyant year for Exchange Traded Funds (ETFs) in 2025, with inflows on track to set a new record. EFAMA’s Monthly Statistical Release for September 2025 reveals that ETFs have attracted over EUR 250 billion in net new money in the first nine months of the year, signalling sustained investor appetite for this investment vehicle. Thomas Tilley, Senior Economist at EFAMA, highlighted the strong preference among investors for ETFs when seeking equity exposure, noting that equity ETFs alone recorded EUR 200 billion in net inflows, while traditional non-ETF equity funds saw outflows totalling EUR 9 billion.

Across broader fund categories, UCITS and Alternative Investment Funds (AIFs) posted combined net inflows of EUR 88 billion in September, a slight dip from August’s EUR 100 billion. Within that segment, UCITS inflows stood at EUR 78 billion, down from EUR 87 billion the previous month. Long-term UCITS funds, which exclude money market funds, saw modest growth with net inflows rising to EUR 72 billion, up from EUR 71 billion in August. ETF UCITS accounted for EUR 36 billion of those inflows, a notable increase from EUR 27 billion the month before. Equity funds registered EUR 27 billion in net inflows, up from EUR 21 billion in August, while bond funds’ inflows declined to EUR 29 billion from EUR 38 billion. Multi-asset funds also improved slightly, recording EUR 9 billion inflows compared to EUR 7 billion in August. UCITS money market funds attracted EUR 7 billion in September, down from EUR 16 billion in August. Meanwhile, AIFs posted net inflows of EUR 9 billion, down from EUR 13 billion the month prior. Overall, total net assets of UCITS and AIFs rose by 1.7 per cent, reaching EUR 24.6 trillion.

This strong momentum follows the record-breaking year for ETFs in 2024, when net ETF sales soared to EUR 261 billion, surpassing the prior yearly record of EUR 169 billion set in 2023. Although net inflows to AIFs were somewhat more modest at EUR 47 billion in 2024, this reflects a steady but less dramatic growth compared to ETFs.

Further contextual insight from various quarters of 2025 shows some shifting investor behaviours. In Q2 2025, global long-term fund sales experienced a slight decline, with total net inflows of EUR 388 billion dropping from EUR 395 billion in Q1. Specifically, equity funds saw net inflows fall to EUR 67 billion in the second quarter from EUR 149 billion in Q1, while bond funds attracted stronger inflows of EUR 274 billion, up from EUR 214 billion. Multi-asset funds experienced net outflows in Q2 but at a reduced rate, and money market funds recorded robust inflows, rising to EUR 241 billion from EUR 146 billion in Q1.

ETF investments have also expanded notably in the actively managed ETF segment globally. According to ETFGI, assets invested in actively managed ETFs reached a record US$1.26 trillion by the end of February 2025, supported by strong net inflows of more than $103 billion year-to-date. This increase occurred despite some market volatility, including a modest decline in the S&P 500 Index during February, suggesting that investors are increasingly confident in ETFs’ ability to deliver diversified exposure even in uncertain times.

Moreover, European investors have demonstrated a marked preference for locally focused ETFs in 2025. By the end of July, these ETFs had attracted a record €39.4 billion, a level that already surpasses any full-year influx since data collection began in 2008. This surge reflects a strategic shift by European investors towards local equity exposure, contrasting with reduced interest in US-focused ETFs, which have seen inflows drop by 40 per cent compared with 2024 levels. The total European ETF market has swollen to €2.4 trillion in assets, reinforcing ETFs’ central role in European investment portfolios.

Collectively, these developments underscore ETFs’ continued ascendancy as a favoured investment choice in Europe, driven by their flexibility, cost-efficiency, and suitability for both equity and fixed income exposure. Industry experts suggest that these trends will likely persist, bolstered by ongoing innovations in ETF structuring and investor education. However, the relatively cautious tone in some segments, particularly noted in the Q2 reduction in global fund sales, suggests that broader market conditions and economic uncertainties will continue to influence investor strategies in the near term.

In summary, EFAMA’s latest data confirm that the growth trajectory for ETFs remains robust in 2025, with records being broken in terms of inflows and assets under management. This is part of a wider fund market landscape characterised by selective investor caution but sustained confidence in ETFs as strategic portfolio components.