European ETFs see inflows of EUR48.2bn in Q1

The European ETF market had a stellar start to 2021, gathering EUR48.2 billion of inflows in the first quarter – a new quarterly high – according to Morningstar’s latest Quarterly European ETF Asset Flows Update.

Assets under management grew by 10 per cent to EUR1.16 trillion. 

Equity ETFs gathered EUR42.5 billion of inflows in the first quarter of 2021. This represented almost 90 per cent of total money invested in ETFs in Europe over the period and were up from EUR38.6 billion in the last quarter of 2020.

The trend towards ESG accelerated in the first quarter with 54 per cent of total inflows in the period directed to ESG ETFs. Assets in ESG ETFs already represent 10.2 per cent of total assets invested in ETFs in Europe.

Risk-on sentiment favoured equity ETFs, which netted close to 90 per cent of total inflows in the first quarter.

The flows data provided evidence of a rotation from growth to value equity strategies.

Flows into thematic ETFs amounted to EUR5.5 billion in the first quarter, a new high for this segment, while assets grew to EUR29.4 billion from EUR23.2 at the end of 2020.

Jose Garcia-Zarate, Associate Director of Passive Strategies Research, says: “This quarter’s data provided evidence of a rotation towards value strategies. The move from growth to value had been touted extensively for much of 2020 and it seems that investors have ceased to just talk and are finally putting money where their mouth is. US and Global large-cap value equity ETFs attracted EUR2.6 billion and EUR1.6 billion respectively in the first quarter. By contrast, US large-cap growth ETFs saw outflows close to EUR300 million.”