European ETFs net flows drop 26% in Q3

In the first quarters of 2021, flows surpassed the total annual for 2020 and assets reached an all-time-high of €1.3trn.

Jose Garcia-Zarate, associate director, passive strategies at Morningstar, said: “The European ETF market gathered €32.6bn of flows in the third quarter, decreasing from €44bn in the second quarter. However, flows into ETFs in the first three quarters of the year, at €125.7bn, have already surpassed the total for the whole of 2020.

“Barring an unexpected sizable dip in flows in the remaining three months, the European ETF market will set a new annual record-high in flows for 2021. Assets under management rose by 4% over the quarter to a few million short of €1.3trn. In terms of asset classes, investors broadly split their preferences between equity and fixed income, with flows of €16.7bn and €14.7bn.”

Other key findings for Q3 2021 include a broad split in investor preferences between equity and fixed income ETFs.

There is growth among ESG ETFs too, as flows amounted to €13.8bn, or 42.5% of all money invested in ETFs in the third quarter. Assets grew by 11% to €158.3bn and represent 12.2% of total assets in ETFs in Europe.

Meanwhile strategic-beta ETFs shed €3.6bn in the third quarter, mostly in value equity factor strategies, while thematic ETFs gathered €1.8bn in flows and assets grew to €34bn.

The majority of ETF providers saw a decline in flows in the third quarter.


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