February matched January’s momentum, with US$54bn of net new assets (NNA) into EMEA ETFs.
Post Middle East conflict, we saw outflows from broad US equity exposures, energy led sector inflows, defence ranked among the most‑bought thematics, and precious metals drew inflows on ‘haven’ demand.
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February extended the strong momentum seen in January, with EMEA ETFs gathering US$54bn in net new assets and almost replicating last month’s record haul. Activity remained broadly risk‑on, as investors continued to add equity exposure while maintaining steady allocations to fixed income and select commodity exposures. Although momentum remained strong, the start of the conflict in the Middle East triggered early outflows from broad US equities and increased demand for energy, defence and precious metals.
Equity ETFs drew US$46bn, accounting for 85% of total NNA. A key feature of the month was the rise of factor‑based and broader smart beta strategies, which moved decisively to the top of the flows table after gathering more than US$10bn. Equal‑weight continued to be the preferred approach for US equity exposure, reflecting sustained interest in diversifying away from cap‑weighted indices. Value and dividend strategies also saw strong demand across regions, supporting the broader rotation toward fundamental factors and income‑oriented styles.
Broad EM equity exposures gathered around US$9bn of NNA, marking a record month for EM flows and building on the strong momentum seen in January and December. A larger proportion of Global Equity inflows went into indices that include EM rather than pure Developed Markets, highlighting a clear preference for broader global coverage. Improving fundamentals and the continuation of the “dedollarisation” theme, driving investors to diversify away from US Dollar assets, remain central to this renewed interest in EM.
EM was also a notable theme in fixed income, with investors allocating to both USD‑denominated and local‑currency exposures. Cash management ETFs continued to attract assets, extending a trend observed in recent months as investors remained focused on high‑quality, lower‑volatility strategies. Global government bonds and European fixed income—spanning government, investment‑grade credit and high yield—also saw steady, positive demand.
Precious metals experienced net outflows amid ongoing profit‑taking, although these were largely offset by inflows into broad commodity exposures. As a result, overall commodity flows ended the month in a relatively balanced position.
Flow dynamics in early March have been influenced by the outbreak of the conflict in the Middle East. Broad US equity exposures have experienced net outflows, reversing the steady demand observed earlier in the year. In contrast, the strongest inflows have continued to favour smart beta strategies, particularly equal‑weight, yield and value, indicating a continuation of February’s dominant themes. Sector flows have shown heightened demand for energy, while defence has emerged as one of the most sought‑after thematic exposures. Precious metals have also seen renewed inflows as investors sought defensive positioning and haven characteristics.
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