BNP Paribas AM – Inflows into UCITS exchange-traded funds rose by 40% in the first half of 2025 from the same 2024 period, for a record volume of just under €150bn, but the underlying trends differed markedly from last year
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Daniel Dornel, Head of ETF Research BNP Paribas AM
ETF investors faced a significant increase in uncertainty in the first half of 2025. The geopolitical and economic environment was shaped by conflict in the Middle East and the US trade war. While tariffs will continue to affect the global economy, it is hoped that the impact will be less severe than initially anticipated.
In this challenging landscape, bonds delivered stable returns to investors, while equities enjoyed solid gains, especially in Europe and Asia.
Global and Europe equities dominate
Equity products have received 75% of the flows since the beginning of the year. The flows were dominated by European and global equity ETFs, which collected €39 billion and €48 billion, respectively. This is a record level for global equities.
Flows into European equities were also unprecedented: the level in the first half of 2025 was almost twice the previous record set in the second half of 2015. As shown in Exhibit 1, out of the 10 largest monthly flows into European equity products since 2015, the top three were all in the first six months of 2025, with March posting a record volume of almost €14 billion.
Inflows into global and European equity ETFs were boosted by strong investor interest in defence exposures. On the back of geopolitical tensions and US President Donald Trump’s pressure on NATO allies to step up their military spending, investors invested over €11 billion in global and European defence ETFs in the first half of 2025.
US equity flows have gone quiet in 2025
After a record-breaking H2 2024 for US equities with €74 billion in inflows, the first six months of 2025 saw waning investor interest, with only €8.8 billion in inflows. This figure included three consecutive months of outflows amid uncertainty about the effects of US import tariffs on growth and inflation.
There was variation, however, underneath the surface. Flows into core US stock index products such as S&P 500 and Nasdaq 100 ETFs were still solid at just under €20 billion. ESG and smart beta products, though, saw outflows, particularly from equal-weight strategies and mid- and small-cap products.
Strong flows into fixed income
By contrast, the first half of 2025 was the strongest first semester on record for fixed income, with flows totalling €34 billion. Monthly flows were nonetheless uneven, with February, May and June attracting more than €8 billion in inflows, while March and April levels were €2 billion or less. Looking at the sub-asset classes, Exhibit 3 shows that most of the flows went into less risky segments. Ultra-short and government bond products lead the way with, respectively, €14 billion and €11.6 billion in inflows.
There were positive flows also into corporate and high-yield bond ETFs (respectively, €5 billion and €1.3 billion), mainly towards the end of the first half as market volatility and uncertainty decreased. In terms of regional allocations, most of the flows went to euro-denominated products, which captured just under 60% of the flows into the asset class.
Source: ETFWorld
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