Investors poured a record amount of €247 billion into European exchange-traded funds (ETFs) and exchange-traded commodity funds in 2024, comfortably surpassing the previous record of €159 billion set in 2021 and setting a record for 2023. This significantly exceeded the previous figure of 145.4 billion euros.
By the end of the year, assets under management had increased by 33% year-on-year to nearly 2.18 trillion euros. The market share of ETFs increased from 26.51% in November 2023 to 29.66% as of November 2024.
Key takeaways from 2024 ETF flows
2024 was a record year: the ETF market saw inflows of €247 billion, surpassing the previous record of €159 billion in 2021 Equity ETFs dominate: strong against large-cap stocks in the US and globally Driven by demand, equity ETFs saw inflows of €197.2 billion. This accounted for 80% of total ETF flows. Rapid increase in active ETFs: Actively managed ETFs tripled ESG and thematic ETFs face challenges: ESG ETF flows fell by 24% to €32.4 billion, with thematic ETFs experiencing outflows for the first time in 10 years .
“2024 was the strongest year on record for the European ETF industry. Equity ETFs were the undisputed winners of the year, amassing €197.2 billion in flows, more than double 2023, and by far the largest share of total flows. 80%,” said José García Zarate, senior principal in manager research at Morningstar. .
Flows into US stock ETFs gain momentum on Trump trade
Strong demand for equity ETFs was driven by a preference for US stocks, especially after Donald Trump’s victory in the US presidential election.
“The ‘Trump trade’ extended to small-cap market caps as US large-cap blend ETFs collected €37.6 billion in the fourth quarter. Investors are betting that his protectionist policies will further push valuations higher,” Zarate said.
Meanwhile, 2024 saw further outflows from ETFs in the German and UK large-cap categories. political instability in Germany, Emotions were hurt by mixed reviews of Britain’s Labor government’s first budget..
Bond investors prefer short-term strategies
Bond ETFs have struggled to maintain momentum. Flows decreased from 57.3 billion euros in 2023 to 47.4 billion euros. Despite downward pressure on yields brought about by the rate cut cycle, investors maintained a bias towards strategies with short maturities of up to one year.
Most popular in the fourth quarter were ETFs in the USD and EUR ultra-short-term fixed income category, which feature money management funds with maturities of up to one year.
The fastest growing fixed income category in 2024 was fixed term ETFs, which gained €5.1 billion and achieved an impressive organic growth rate (OGR) of 269%. OGR calculates inflows to assets at the beginning of the period. Assets in this category increased from 1.9 billion euros in 2023 to 7.4 billion euros.
Commodity ETCs and ETFs recorded outflows of EUR 7.4 billion in 2024.
ESG and thematic strategies struggle, but active ETFs shine
Environmental, social and governance strategies also faced headwinds. ESG ETF flows fell to €32.4 billion, significantly down from €42.8 billion in 2023. This decline coincided with increased regulatory uncertainty and a year in which ESG strategies underperformed traditional strategies. By the end of the year, total assets in ESG-focused equity ETFs amounted to €325.3 billion, up from €256 billion in 2023, but ETFs’ share of total equity flows will rise from 34% in 2023 to just 11% in 2024. %.
Total assets in ESG bond ETFs increased from €78.2 billion in 2023 to €91.3 billion in 2024, with inflows into this category reaching €2.4 billion in 2024.
“In addition to this, thematic ETFs saw outflows of €1.1 billion in 2024, making it the first year of disinvestment in the past 10 years,” Zarate said. “ETFs tracking energy transition themes led the outflows, while ETFs tracking security, AI, and big data themes were in demand.”
Overall, assets in thematic ETFs increased slightly to €37.8 billion.
Amid these challenges, active ETFs have emerged as a bright spot. Flows into actively managed ETFs surged to €19.1 billion, almost triple the previous year’s total. This segment currently accounts for 7.7% of total ETF flows, up from 4.6% in 2023. Active ETF assets account for 2.5% of total assets invested in ETFs in Europe, up from 1.8% in 2023.
JPMorgan consolidated its dominance in the sector, gaining a commanding market share of 54.6%, while other players such as Amundi and Robeco also made impressive progress.
Commodities underperform again
The fourth quarter of 2024 highlighted the broader trends of the year. Total flows for the quarter amounted to 86 billion euros, mainly driven by equity ETFs, which alone brought in 78.5 billion euros. Continued strength in US stocks, supported by macroeconomic optimism and political developments, played a pivotal role. Commodity markets continued their downward trajectory, reflecting investors’ deep skepticism about the asset class.
iShares is again in the top spot
BlackRock’s iShares maintained its position as Europe’s leading ETF provider, capturing flows of €84.4 billion and holding a commanding market share of 42.2%. Extratrackers and Amundi followed, with inflows of 36 billion euros and 27.5 billion euros respectively. Amundi remained in second place with a share of 12.4%, while Xtrackers was in third place with a share of 10.9%. The top 10 providers together accounted for the majority of the market’s AUM, underscoring their solid dominance.
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