November 2024 was another month with strong inflows for the European ETF industry.
Following the new all-time high monthly inflows in October (+€28.5 bn), the inflows into ETFs in Europe marked another all-time high (+€29.3 bn) in November. These inflows drove the estimated year-to-date net flows up to €225.0 bn, which would mark a new record for estimated full year inflows. That said, the strong inflows over the course of November brought my expectations for the estimated full year net flows up to a range between €230.0 bn and €240.0 bn.
The flows in the European ETF industry over the course of November were dominated by equity ETFs (+€29.3 bn) while bond ETFs faced outflows (-€0.5 bn) for the month. Unsurprisingly, the inflows into equity ETFs were fueled by the outcome of the presidential election in the U.S. Equity U.S. enjoyed estimated net flows of €17.3 bn, which shattered the old all-time high for monthly inflows (€6.9 bn) which was achieved just a month ago. Equity U.S. Small & Mid Cap (+€4.2 bn) was the third best-selling classification overall followed by Equity Sector Financials (+€1.2 bn). These strong inflows might be caused by the so-called “Trump-trade,” as the president-elect announced parts of his program for economic growth and deregulation, especially in the financial services sector.
Graph 1: Ten Best- and Worst-Lipper Global Classifications by Estimated Net Sales, November 2024 (Euro Millions)
Source: LSEG Lipper
Nevertheless, the strong inflows into ETFs over the course of the month seem to be driven by a general demand for ETFs since Equity Global, the second best-selling classification, enjoyed strong estimated net inflows (+€9.2 bn).
Within the bond segment we found a story for U.S.-dollar bonds, which we have seen for EUR bonds in October, as European investors bought into Bond USD High Yield (+€0.4 bn) and sold Bond USD Corporates (-€0.7 bn). Speaking about last month, European ETF investors bought Bond EUR High Yield ((+€1.6 bn) in October but reduced their exposure to this classification over the course of November (-€0.3 bn).
It also looks like European investors are reducing their exposure to emerging market bonds, as Bond Emerging Markets in Hard Currencies (-€1.4 bn), Bond Emerging Markets in Local Currencies (-€0.3 bn), and Bond Emerging Markets Other (-€0.04 bn) faced outflows. Conversely, Bond Emerging Markets Corporates (+€0.05 bn) enjoyed shy inflows.
More generally speaking, the fund flows for October show from my point of view that European ETF investors are further in risk-on mode and were anticipating a clear result for the U.S. presidential election as well as further declining interest rates in the U.S. and the EU.
Another version of this article has been published on ETF Stream before.
This article is for information purposes only and does not constitute any investment advice.
The views expressed are the views of the author, not necessarily those of LSEG.
