Morningstar: European ETFs see 26% decrease in net flows in Q3

13 okt 2021

The European ETF market—inclusive of exchange-traded commodities—gathered EUR 32.6 billion of flows in the third quarter. This was a 26% decrease from the EUR 44 billion in the second quarter.

However, flows into ETFs in the first three quarters of the year, at EUR 125.7 billion, 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 EUR 1.3 trillion.

In terms of asset classes, investors broadly split their preferences between equity and fixed income, with flows of EUR 16.7 billion and EUR 14.7 billion, respectively. There was a noted decrease in flows into equity ETFs compared with the two previous quarters, although assets grew to EUR 876.7 billion from EUR 849.8 billion in the second quarter.

Meanwhile, flows into bond ETFs increased to EUR 14.7 billion from EUR 10.2 billion in the second quarter, and assets jumped to EUR 299.2 billion from EUR 282.8 billion. While emerging-markets debt was generally out of favour, investors continued to show firm appetite for Chinese Treasury bonds despite the unfolding liquidity crisis affecting the Evergrande Group.

Flows into ESG ETFs increased slightly in the third quarter to EUR 13.8 billion from EUR 12.5 billion in the second quarter. This accounted for 42.5% of total money invested in ETFs during the period, significantly up from 28.4% in the second quarter.

Assets in ESG ETFs increased to EUR 158.3 billion from EUR 143 billion in the second quarter and represent 12.2% of total assets in ETFs in Europe.

Strategic-beta ETFs saw outflows of EUR 3.6 billion in the third quarter, led by the group of value equity ETFs, which investors had favoured in the previous two quarters.

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