May European ETF Flows

Explore our latest ETF Snapshot for detailed European ETF market trends and ETF flow highlights.

Key takeaways

Upcoming IPOs and US concentration risk

SpaceX could become one of the largest US public companies, but only a small portion of shares (~3-5%) is expected to trade initially. That limits its index weight relative to its size, meaning the IPO is unlikely to materially change passive index dynamics. For investors concerned about concentration, equal weight strategies may offer more balanced exposure.

Hedging costs may favour EUR-denominated bonds

With USD-to-EUR hedging costs currently around 1.6% p.a., the yield on USD-denominated bonds may not materially outweigh that cost for European investors. In asset classes such as AT1s and AAA CLOs, where the EUR yield can be comparable or potentially more attractive on a hedged basis, investors may find it more efficient to consider EUR-denominated exposures directly.

Outlook for gold: What if peace was around the corner?

Gold activity has been relatively muted, but the backdrop remains supportive. Central banks continue to balance inflation and growth risks and have resumed buying after earlier selling. If geopolitical tensions ease, lower volatility and greater flexibility in interest rate policy could create a more constructive environment for gold.

ETF flow highlights in numbers

• European ETFs gathered US$45bn in May, with equities capturing US$28bn (62% of flows) and fixed income a further US$14bn.
• Global equities led the way, with US$7.7bn flowing into All-World exposures and a further US$4.5bn into developed markets only. Core US equities attracted US$7.9bn, primarily into S&P 500 and Nasdaq-100 ETFs.
• Thematic ETFs continued to see strong interest, with US$4.3bn of NNA in May and US$18.3bn year to date. Technology, defence and infrastructure remained the most favoured themes.
• Fixed income demand was broad-based, with government bonds (US$3.5bn), investment grade credit (US$2.7bn), cash management (US$2.7bn) and high yield (US$1.2bn) all attracting meaningful flows.
• Commodities gathered US$3bn in NNA, with signs that demand could be shifting towards broader exposures rather than a focus on single commodities. 

FAQs

Which equity ETF exposures attracted the most inflows?

Global core equity led with US$13.1bn, followed by US core equity with US$7.9bn and thematic ETFs with US$4.3bn (technology-related themes accounting for US$2.2bn of that total).

What is driving interest in cybersecurity ETFs?

Anthropic’s Mythos helped identify vulnerabilities in systems, boosting the performance of cybersecurity companies. A fragmented, more conflicted world is creating a structural, ongoing need for investment in security.

Will the SpaceX IPO increase US index concentration risk?

Only a small slice of shares, perhaps 3–5%, are expected to trade initially, sharply limiting SpaceX’s index weight relative to its headline size. The IPO and inclusion will do little to change the dynamics of the Nasdaq-100 or wider markets.

What is the outlook for gold?

Gold ETPs saw little activity in May (+US$0.2bn) but are up US$1.5bn year to date. Central banks resumed buying gold after some selling in March, and a potential peace settlement could allow for softer interest rate policies, a potentially bullish backdrop for gold.