In July, the IMF upgraded its global growth outlook for 2025, to 3% (from 2.8% in April), citing tariff frontloading, lower effective tariff rates, better financial conditions and fiscal expansion in some major jurisdictions. However, risks remain from sticky inflation and geopolitical tensions.
The US economy rebounded strongly in Q2, from a Q1 contraction. Consumer spending rose, and imports fell, boosting net exports. Inflation remained elevated, with core PCE at 2.8% year-over-year, while the Federal Reserve held rates steady.
This seemed sufficient to sustain the global equity rally that began in mid-April, as US trade deals with key trading partners sustained market optimism about the macro backdrop for risk assets
The US rally was driven by robust Q2 earnings, particularly from mega-cap tech firms. By 8 August, of the 452 companies in the S&P 500 that had reported earnings for Q2, 80.3% reported earnings above analyst estimates. This compares to a long-term average of 67% and prior four quarter average of 76%, according to LSEG analysis.
Over the month, the FTSE 100, Asia Pacific, Emerging and Japan indices outperformed the FTSE All-World, while Russell 1000, FTSE 250, Russell 2000 and Eurozone lagged. Value outperformed strongly, driven by the factor’s relatively higher exposure to Financials and Energy, which outperformed in many regions. The US was an exception, where Tech drove most of the index’s returns. Tech actually detracted in Europe and Asia Pacific, reflecting the tech industry in these regions higher exposure to trade barriers.
Despite this generally equity-positive environment, bond funds saw the strongest inflows for the month (+€37.18bn), as equities suffered the largest redemptions (-€22.089bn).
It’s noteworthy that European investors’ cautious exit from Equity US funds seen in June became a flood in July, as the classification suffered the largest outflows (-€21.04bn), followed by the US-heavy Equity Global
(-€13.97bn). Equity beneficiaries were Equity Emerging Markets Global (+€4.28bn), Equity Switzerland (netting +€3.21bn, despite swingeing tariffs), and Equity Europe (+€2.23bn).
Asset Type Flows
Asset Type Flows July 2025
Graph 1: Estimated Net Flows by Asset and Product Type – July 2025 (€bn)
Source: LSEG Lipper
Total flows to mutual funds and ETFs for July were €36.02bn, showing a progressive decline since April, despite the ongoing rally from early that month. Mutual funds attracted €8.83bn, while ETFs took €27.19bn.
Bond flows were the most successful asset class for the second consecutive month (+€37.18bn: +€33.77bn MF/+€3.14bn ETF). MMFs followed once again (+€17.37bn: +€16.37bn MF/+€1.01bn ETF) , broadly in line with the previous month; then, at some distance, alternatives (+€3.06bn: +€2.62bn MF/+€0.43bn ETF); commodity funds (+€1.05bn: +€0.72bn MF/+€0.32bn ETF); and mixed assets (+€0.23bn: +€0.20bn MF/+€0.03bn ETF), recovering somewhat from last month’s heavy outflows.
On the negative side of the equation, equity funds saw the worst redemptions, despite positive ETF flows (-€22.09bn:
-€44.07bn MF/+€21.98bn ETF). Less severely, real estate (-€0.77bn, all MF) and ‘Other’ funds (-€0.01bn, all MF) both saw redemptions.
Asset Type Flows Year to Date
Graph 2: Estimated Net Sales by Asset and Product Type, January 1 – July 31, 2025 (€bn)
Source: LSEG Lipper
Equity funds’ July redemptions have pushed the asset class from first to third place in YTD flows over July (+€99.19bn: -€39.56bn MF/+€138.75bn ETF). Last month, we pondered that “the significant volatility of Q2 is giving many investors food for thought”, and that pause seems now to have changed to a rush for the exists by some. That’s particularly the case with mutual funds, although ETFs are still robust, both YTD and over the month.
Bond funds now lead the pack (+€143.57bn: +€118.18bn MF/+€25.39bn ETF), then MMFs (+€126.48bn: +€114.67bn MF/+€11.81bn ETF).
Alternatives nudge ahead of mixed assets (+€11.65bn: +€9.87bn MF/+€1.78bn ETF) with the latter taking +€11.56bn: (+€11.07bn MF/+€0.50bn ETF). Commodity funds were in positive territory (+€5.2bn: +€3.72bn MF/+€1.48bn ETF).
Conversely, real estate (-€4.56bn, all MF) and ‘Other’ funds (-€0.48bn, all MF) saw outflows over the year.
Fund Flows Active vs Passive Products
Graph 3: Estimated Net Flows by Management Approach and Product Type, July 2025 (LHS);
January 1 – July 31, 2025 (RHS). €bn
Source: LSEG Lipper
July was a relatively strong month for actively managed mutual funds, netting +€46.06. Over the month, ETFs saw inflows of €27.19bn—up about €7bn on June—with mutual fund index trackers shedding €37.23bn, significantly larger than June’s redemptions of €4.31bn. YTD, those figures are €234,53bn, +€179.71bn, and -€21.64bn.
When MMFs are stripped out YTD, flows to long-term assets in ETFs were +€167.9bn, actively managed mutual funds’ share of long-term asset flows was €124.06bn, while index-tracking mutual funds were in the red as a result of July’s moves: -€25.83bn.
Fund Flows by Lipper Global Classification
Fund Flows by Lipper Global Classification, July 2025
Graph 4: Ten Best- and Worst Lipper Global Classifications by Estimated Net Sales, July 2025 (€bn)
Source: LSEG Lipper
Money Market EUR moves up three places to take the lead in July (+€13.34bn, almost all in MFs). Conversely, last month’s “chart-topper”, Money Market USD, crashes down third from bottom (-€4.52bn: -€5.34bn MF/+€0.82bn ETF). Other cash and cash-like classifications did well, such as Target Maturity Bond EUR 2020+ (+€5.8bn) and Money Market GBP (+€4.77bn). Lower duration in credit and higher yields provided an attractive combination in performance terms over the month, likely supporting Bond Global Short Term (+€4.16bn) and Bond EUR Short Term (+€2.68bn).
Equity Emerging Markets Global (+€4.28bn), Equity Switzerland (despite swingeing tariffs, netting
+€3.21bn), and Equity Europe (+€2.23bn) saw the strongest equity classification flows.
On the other hand, Equity US (-€21.04bn: -€24.49bn MF; +€3.45bn ETF) and Equity Global (-€13.97bn:
-€19.92bn; +€5.95bn) saw the worst outflows. The net inflows to ETFs in these classifications—and the sales of mutual fund index trackers—suggests that the money that is staying is looking for lower-cost accommodation in the area. If you strip out these two, equity flows are modestly positive. Equity UK remains in negative territory (-€1.34bn), though for once dwarfed by US and Global.
UK and US were the stand-out investment-grade bond markets, reflecting the slower policy easing in the US and UK, according to FTSE Russell analysis, although this doesn’t seem to have benefited Bond GBP Corporates (-€3.62bn).
Fund Flows by Lipper Global Classification, Year to Date
Graph 5: Ten Best- and Worst Lipper Global Classifications by Estimated Net Sales, January 1 – July 31, 2025 (€bn)
Source: LSEG Lipper
July’s redemptions push Equity Global off the top spot YTD, though it still clings to second (+€53.97bn:
+€12.32bn MF; +€41.65bn), now behind Money Market EUR (+€68.46bn: +€61.36bn; MF/€7.1bn ETF). Money market USD still makes third (+€45.89nm), despite strong outflows in July.
Equity US flows are now in the red YTD (-€2.33bn, albeit with +€16.05bn to ETFs), pushed down from June’s sixth-highest positive flows. The brunt YTD has been born by Equity US Small & Mid Cap (-€5.73bn), though that could well change if July’s pattern extends. European investors have made Equity Europe the favoured substitute within the asset class (+€25.35bn: +€8.36bn MF/+€16.99bn).
The flows to Bond Global Short Term (+€19.1bn) and Bond EUR Short Term (+€17.18bn) shows that many investors are finding opportunities at the short end, as both long and short ends of the yield curve are creeping up. With a relatively flat curve, many investors are clearly asking why move further out at greater risk.
Fund Flows by Promoter
Fund Flows by Promoter, July 2025
Graph 6: Ten Best-Selling Fund Promoters in Europe, July 2025 (€bn)
Source: LSEG Lipper
Amundi led the field in July (+€12.06bn: +€9.41bn MFs/+€2.64bn ETFs). As was the case in June, BNP Paribas followed (+€9.21bn: +€8.23bn MFs/+€0.97bn ETFs). In this environment, it’s unsurprising that both are major providers of MMFs.
The sales of the 10 top-selling managers for the month summed to +€47.22bn—broadly in line with June, but 131% of the total, compared to the previous month’s 97%, indicating that other providers have suffered significant redemptions.
Fund Flows by Promoter, Year to Date
Graph 7: Ten Best-Selling Fund Promoters in Europe, January 1 – July 31, 2025 (€bn)
Source: LSEG Lipper
Strong recent flows push BNP Paribas to number one (+€26.74bn: +€21.46bn MFs/+€5.29bn ETFs), followed by Vanguard (+€25.25bn: +€6.44bn MFs/+€18.81bn ETFs).
The pattern of BlackRock’s YTD flows is obviously a standout feature of the chart above, with -€41.55bn from mutual funds and +€64.43bn into ETFs.
The sales of the 10 top-selling managers for the month summed to €199.22n, or 51% of the total.
