European-listed ETFs gathered US$12bn of net new assets, reflecting caution amidst heightened geopolitical uncertainty.
Investors continued to trim core US equity exposure, while All‑World and European equity ETFs attracted steady inflows.
Higher dividend strategies, defence and infrastructure stood out, while cash management dominated fixed income demand.
Global equity exposures retained their position at the top of the flows table, capturing nearly 70% of total equity inflows. Within this, All‑World equity ETFs were the clear preference, pointing to an ongoing effort by investors to broaden diversification, include emerging markets and reduce concentrated US exposure. That trend was reinforced by more than US$2bn of net outflows from core US equity ETFs during the month.
By contrast, investors seeking developed market exposure outside the US continued to favour Europe. Core European equity ETFs collected over US$3bn of net new assets, making them the most popular regional allocation and extending the gradual rotation toward non US developed markets.
Outside traditional market‑cap exposures, smart beta and thematic strategies remained well supported. Higher dividend strategies attracted US$1.7bn, reflecting continued demand for income and defensive characteristics.
Within thematics, defence once again stood out, gathering US$1.1bn, while infrastructure collected US$600m, likely supported by energy security concerns and fiscal spending visibility. These flows point to investors positioning for persistence in geopolitical risk rather than a swift resolution.
Fixed income flows were modest overall, but cash management ETFs continued to capture the majority of demand, consistent with elevated uncertainty and attractive front‑end yields. Flows showed a clear bias toward EUR‑denominated exposures, which gathered US$3bn, while USD‑denominated strategies still attracted just over US$1bn.
In credit markets, European high yield and investment‑grade exposures experienced net outflows, partially offset by continued demand for global investment‑grade strategies, where investors appear to be favouring diversification and quality.
Despite sharp underlying price movements, gold weakening and oil rising, commodity ETF flows were relatively muted. The asset class recorded a small net inflow overall, suggesting investors are watching developments closely but have yet to reposition in size.
That said, commodities remain an area to monitor, particularly if energy-driven inflation risks become more pronounced as a result of prolonged Middle East tensions.
European ETF flows stayed positive as investors remained cautious rather than risk averse, favouring diversification, European equities and defensive exposures amid Middle East tensions.
The rotation reflects concerns around concentration risk, elevated US valuations and a preference for broader All World and European equity ETF exposures.
Demand remains strongest for dividend focused ETFs, defence and infrastructure thematics, and cash management ETFs, highlighting a defensive yet selective investor stance.
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