The global financial markets were shaped by a sharp shift in macroeconomic narratives, driven primarily by geopolitical tensions, energy price volatility, and an increasingly fragmented monetary policy landscape over the course of Q1 2026.
Bond markets reflected a transition from the synchronized easing expectations of late 2025 to a more uncertain environment. In March rising oil prices, linked to renewed geopolitical tensions in the Middle East, pushed inflation expectations higher and challenged the disinflation trend. Within this environment, central bank policies were back in focus of the investors.
In more detail, Q1 2026 marked a clear divergence among major institutions. The Federal Reserve maintained a cautious “wait-and-see” stance, holding rates steady as it balanced moderating inflation against geopolitical risks and energy-driven price pressures. Similarly, the European Central Bank kept rates unchanged, signalling flexibility but refraining from further easing amid rising inflation linked to energy costs. The Bank of England also paused, with policymakers highlighting the inflationary impact of the energy shock and even reopening the discussion around potential tightening.
In contrast, the Bank of Japan stood out by maintaining a tightening bias after its earlier policy shift, reflecting stronger domestic inflation dynamics and a gradual exit from ultra-loose policy.
At the same time, structurally higher yields continued to attract investors back into fixed income as an asset class, with bonds regaining their role as a source of income and diversification.
Equity markets experienced notable sector rotation rather than a uniform trend over the course of Q1 2026. Energy stocks outperformed amid the surge in oil prices, while rate-sensitive sectors such as technology came under pressure as expectations for rapid monetary easing were pushed back. This rotation reflected a broader repricing of inflation and interest rate trajectories, as well as persistent uncertainty about global growth. Nevertheless, the overall trend in corporate earnings during Q1 2026 can be characterised as solid but uneven growth, with a clear divergence across sectors and regions, and increasing sensitivity to macroeconomic and geopolitical conditions. At an aggregate level, measured by the S&P 500 companies, earnings growth remained resilient, as companies are expected to deliver low double-digit year-on-year earnings growth. This indicates that, despite macro uncertainty, corporate profitability continued to expand and exceeded (partly) earlier expectations.
Overall, Q1 2026 was characterised by a move from policy synchronisation to divergence, from disinflation optimism to renewed inflation uncertainty, and from broad-based equity gains to more selective market leadership. These dynamics underline a more complex investment environment in which geopolitical developments and central bank policies remain central to investor confidence and market direction.
Assets Under Management in the European ETF Industry
From a European ETF industry perspective, the performance of the underlying markets led, in combination with the estimated net flows, to increasing assets under management (from €2,578.3 bn as of December 31, 2025, to €2,657.0 bn at the end of March) over the course of Q1 2026. At a closer look, the increase in assets under management of €78.7 bn for Q1 2026 was driven by estimated net inflows (+€107.5 bn), while the performance of the underlying markets (-€28.8 bn) had a negative impact on the assets under management.
Graph 1: Assets Under Management in the European ETF Industry, January 1, 2000 – March 31, 2026 (Euro Billions)
Source: LSEG Lipper
As for the overall structure of the European ETF industry, it was not surprising equity ETFs (€2,022.1 bn) held the majority of assets, followed by bond ETFs (€507.0 bn), commodities ETFs (€64.7 bn), money market ETFs (€49.4 bn), alternatives ETFs (€9.0 bn), and mixed-assets ETFs (€5.0 bn).
Graph 2: Market Share, Assets Under Management in the European ETF Segment by Asset Type, March 31, 2026
European ETF Industry Review – Q1 2026 – LSEG Lipper
Source: LSEG Lipper
Given the negative market environment over the course of the month, it is no surprise that the former records for the overall assets under management in the European ETF industry as well as for the single asset types were not broken at the end of the month. This means the negative market environment over the course of the month ended the series of new month end all-time highs in assets under management.
ETF Flows by Asset Type
The inflows into the European ETF industry over the course of Q1 2026 (+€107.5 bn) are on course to reach a new annual all-time-high at the end of 2026, despite comparably low inflows into ETFs over the course of March (+€10.5 bn). Nevertheless, the inflows for March showcase how resilient the fund flows into ETFs in Europe are, especially if one takes into account that mutual funds in Europe witnessed overall outflows for the same month.
Despite the rough market environment, the inflows in the European ETF industry for Q1 2026 were driven by equity ETFs (+€86.1 bn), followed by bond ETFs (+€13.6 bn), money market ETFs (+€7.0 bn), commodities ETFs (+€0.5 bn), and mixed-assets ETFs (+€0.2 bn). On the other side of the table, alternatives ETFs (-€0.03 bn) was the only asset type which faced outflows for the year so far.
Graph 3: Estimated Net Sales by Asset Type, January 1 – March 31, 2026 (Euro Billions)
Source: LSEG Lipper
Given the general market environment, it was surprising to see that the estimated net inflows into ETFs were led by equity ETFs over the course of the quarter. The relatively high inflows into money market products might be a sign for a flight to safe havens by European investors to avoid volatility in the bond markets or possibly rising rates, as the inflation may rise given the increase in the price of oil.
As graph 4 shows, equity ETFs enjoyed inflows in each of the three months of the first quarter of 2026, while bond ETFs faced outflows in March. The graph also shows that the inflows in equity ETFs were somewhat stable over the course of January and February and slowed down over the course of March. This slowdown was mainly driven by start of the war in the Middle East. Nevertheless, the flows in equity ETFs stayed positive, which once again showed the resilience of ETF flows in times of market turmoil. This might be seen as a sign that European investors like the liquidity, tradability, and transparency of ETFs, especially in times when markets are rough.
Graph 4: Monthly Estimated Net Sales by Asset Type, January 1, 2026 – March 31, 2026 (USD billions)
European ETF Industry Review – Q1 2026 – LSEG Lipper
Source: LSEG Lipper
The trend for the estimated net flows over the course of Q1 2026 was somewhat surprising. Especially the high inflows for January (+€48.2 bn) and February (+€48.7 bn), as both months were setting a new record for monthly inflows into ETF in Europe on a new level. The old record for monthly inflows into ETFs in Europe stood at €39.6 bn (October 25).
These flows showed that the adoption of ETFs by all kind of investors is further increasing in Europe, despite the opinion of some market observers who may see a saturation in the use of ETFs or a shift in sentiment towards active managed mutual funds.
Assets Under Management by Lipper Global Classifications
In order to examine the European ETF markets in further detail, a review of the Lipper global classifications will lead to more insights on the structure and concentration of assets within the European ETF industry. At the end of March, the European ETF market was split into 186 different peer groups. The highest assets under management at the end of March were held by ETFs classified as Equity U.S. (€603.7 bn), followed by Equity Global (€494.8 bn), Equity Europe (€211.6 bn), Equity Emerging Markets Global (€140.0 bn), and Bond EUR Corporates (€58.5 bn). These five peer groups accounted for €1,518.6 bn, or 57.15%, of the overall assets under management in the European ETF segment, while the 10-top classifications by assets under management accounted for 66.30%.
Overall, 17 of the 186 Lipper classifications each accounted for more than 1% of assets under management. In total, these 17 classifications accounted for €2,000.0 bn, or 75.27%, of the overall assets under management. (Please read the article: Review of the Market Concentration of Assets Under Management in the European ETF Industry at the Classification Level for information on this topic)
Graph 5: Ten Largest Lipper Global Classifications by Assets Under Management, March 31, 2026 (Euro Billions)
Source: LSEG Lipper
In addition, it was noteworthy that Bond EUR Corporates had moved up on the list of the five largest Lipper classifications in January, while Equity Sector Information Technology fell from the fifth to the sixth spot. This may be a sign of a change in risk appetite of European investors. Since the assets under management held by ETFs in Equity Sector Information Technology fell even further over the course of February, this might be a space to watch in the future, even as the sector gained back the sixth position over the course of March.
More generally, the rankings of the largest classifications saw some movement in single positions over the last few years. As the positions of the classifications had been quite stable in the past, this indicates that European investors use ETFs to trade according to their market views. Even as some of these positions might be core holdings, once investors got into risk-off mode they also reduced their exposure to core asset classes.
Despite the fact that the rankings at the top of the league show some changes from time to time, these numbers show that the assets under management by Lipper global classifications continued to be highly concentrated in the European ETF industry.
The classifications on the other side of the table showed some funds in the European ETF market are quite low in assets and their constituents may face the risk of being closed in the near future. They are obviously lacking investor interest and might, therefore, not be profitable for their respective fund promoters (Please read our report: “Will the ETFs in the Smallest Lipper Classifications in the European ETF Industry Survive?” for more details on this topic).
Graph 6: Ten Smallest Lipper Global Classifications by Assets Under Management, March 31, 2026 (Euro Billions)
Source: LSEG Lipper
ETF Flows by Lipper Global Classifications
The net inflows of the 10 best-selling Lipper classifications accounted for €75.3 bn. In line with the overall sales trend for Q1 2026, equity peer groups (+€66.1 bn) dominated the flows by asset type on the table of the 10 best-selling peer groups by estimated net inflows. That said, it was surprising to see only one bond classifications on the table of the 10 best-selling classifications for the quarter, taking the general market sentiment into account. Given the overall fund flow trend in the European ETF industry, it was somewhat surprising that Equity Global (+€24.0 bn) was the best-selling Lipper global classification for Q1 2026, since this spot was held by Equity U.S. for a long time. It was followed by Equity Emerging Markets Global (+€12.9 bn), Equity Europe (+€10.2 bn), Money Market EUR (+€5.4 bn), and Equity Sector Industrials (+€5.1 bn).
Generally speaking, it is not surprising that Equity Europe is in one of the top spots on the table of the 10 best-selling Lipper classifications given the overall market trend of increasing flows into ETFs investing in Europe and the good performance of European equities compared to their U.S. peers. In addition to this, it is also not surprising to see Equity Sector Industrials on the list of the 10 best-selling classifications for Q1 2026, since the classification profited from the strong inflows into defense-related ETFs and the overall sector rotation toward classic value sectors. Conversely, it was surprising to see Equity U.S. on the second half of the table, since this classification has been one of European investors’ favorites in the past.
The general trend of inflows into money market products continued over the course of the quarter. Nevertheless, money market is in general not considered as a core asset type within the European ETF industry. However, taking the market environment and the overall fund flow trends into account, it was not surprising to see Money Market EUR (+€5.4 bn) on the table of the 10 best-selling classifications in the European ETF industry.
Graph 7: Ten Best- and Worst-Lipper Global Classifications by Estimated Net Sales, March 1 – March 31, 2026 (Euro Billions)
Source: LSEG Lipper
More generally, these numbers showed the European ETF segment is also highly concentrated when it comes to fund flows by Lipper classification. Generally speaking, one would expect the flows into ETFs to be concentrated since investors often use ETFs to implement their long-term market views and short-term asset allocation decisions. These products are made and, therefore, are easy to use for these purposes.
On the other side of the table, the 10 classifications with the highest estimated net outflows for Q1 2026 accounted for €9.8 bn in outflows.
Equity Sector Financials (-€1.9 bn) was the classification with the highest outflows for the month. It was bettered by Equity China (-€1.8 bn), Commodity Precious Metals (-€1.2 bn), Bond EUR High Yield (-€1.2 bn), and Bond Global Short Term (-€0.8 bn).
Insights into the ETF Flows by Lipper Global Classification
As said before, it was somewhat surprising that Equity Global (+€24.0 bn) was the best-selling Lipper global classification for 2026 so far. Nevertheless, Equity Global is steadily in one of the two top spots on the monthly tables of the best-selling Lipper classifications over the past 24 months. Conversely, Equity U.S. (+€3.6 bn) faced some months with low flows over the course of the last 12 months, since investors started to favor Equity Europe (+€10.2 bn) over U.S. equities. The real surprise was the fact that there was only one bond classification on the table of the 10 best-selling Lipper classifications for the quarter. That said, it was even more surprising that this was US-Dollar focused bond classification (Bond Global USD +€3.8 bn), which may mean that European investors might expect that the US dollar will further strengthen compared to the euro.
Equity Sector Industrials (+€11.6 bn) was the fifth best-selling Lipper classification for the first three months of 2026. The inflows in the classification were driven by ETFs investing in defense-related stocks since this has become a new investment trend in Europe after most governments in Europe agreed to increasing their defense spending to become less dependent on the U.S. when it comes to their military capabilities to defend their home countries.
By looking at the flows into money market products over the course of 2026 so far, it is not surprising to see Money Market EUR (+€5.4 bn) outpacing Money Market USD (+€1.6 bn) on the list of the best-selling Lipper classifications. This is because money market products are seen as safe haven products and European investors might not want the volatility of a foreign currency in the low-risk part of their portfolios. That said, the inflows into money market USD might be part of the liquidity which European investors have generated by selling USD denominated assets and which shall be invested back into USD denominated assets at a later point in time.
On the other side of the table, the outflows from Equity Sector Financials (-€1.9 bn) might have been driven by fears of possibly rising interest rates, as such an environment may impact the revenues of financial institutions negatively. The outflows from Equity China (-€1.8 bn), might have been caused by frictions between China and the U.S., as tariffs and economic burdens may impact the general economic growth of China, buy might also have an (strong) impact on Chinese technology companies.
Since gold is seen as safe haven in times of geopolitical insecurity and market turmoil, it might be surprising that Commodity Precious Metals (-€1.2 bn), and Equity Sector Gold & Precious Metals (-€0.3 bn) both faced outflows over the course of the first quarter 2026. That said, given the strong performance of gold, these outflows might have been caused by profit taking. In addition to this, some investors may exited gold as it is a highly liquid asset class and they didn’t want to sell some of their other assets, which might be harder to sell, or have a negative performance.
More general, a number of the Lipper classifications which had outflows over the course of Q1 2026 were non-core classifications like Bond EUR High Yield (-€1.2 bn), Bond EUR Corporates (-€0.7 bn), Bond USD Corporates (-€0.5 bn), Bond USD High Yield (-€0.5 bn), Equity Australia (-€0.4 bn), Equity Sector Consumer Discretionary (-€0.2 bn), etc. These outflows may indicate that European investors are cleaning up their portfolios, by selling non-core risk positions and buy back either safe haven assets or core positions with a higher risk like Equity Global or Equity Europe.
That said, the estimated net flows for Q1 2026 on Lipper classification level may indicate that European ETF investors are rather in a risk-on than risk-off. This assumption is also backed by the overall trend in the monthly estimated net flows for the year so far.
Assets Under Management by Promoters
A closer look at assets under management by promoters in the European ETF industry also showed high concentration, with only 35 of the 73 ETF promoters in Europe holding assets at or above €1.0 bn, accounting for €2,650.4 bn. The largest ETF promoter in Europe—iShares (€1,098.8 bn)—accounted for 41.35% of the overall assets under management. This number is far ahead of the number-two promoter—Amundi ETF (€342.9 bn)—and the number-three promoter—Xtrackers (€273.5 bn). (To earn more about the concentration of the European ETF market at the promoter level, please read our report: Review of the concentration of the assets under management in the European ETF industry on promoter level).
Graph 8: The 10 Largest ETF Promoters by Assets Under Management, March 31, 2026 (Euro Billions)
Source: LSEG Lipper
The 10-top promoters accounted for (€2,447.4 bn) 92.11% of the overall assets under management in the European ETF industry. This meant, in turn, the other 63 fund promoters registering at least one ETF for sale in Europe accounted for only 7.89% of the overall assets under management.
ETF Flows by Promoters
Since the European ETF market is highly concentrated when it comes to assets under management by promoter, it was not surprising that seven of the 10 largest promoters by assets under management were among the 10-top selling ETF promoters for the month. iShares was the best-selling ETF promoter in Europe for Q1 2026 (+€33.5 bn), ahead of Amundi ETF (+€16.3 bn) and UBS ETF (+€11.0 bn).
Graph 9: Ten Best-Selling ETF Promoters, January 1 – March 31, 2026 (Euro Billions)
Source: LSEG Lipper
The flows of the 10-top promoters accounted for estimated net inflows of €14.4 bn. As for the overall flow trend for Q1 2026, it was clear that some of the 75 promoters (15) which were active in the European ETF industry over the course of the first quarter faced estimated net outflows (-€2.2 bn in total) over Q1 2026.
Assets Under Management by ETFs
There were 4,784 instruments (primary share classes [2,377] and convenience share classes [2,407]) listed as ETFs in the Lipper database at the end of March. Regarding the overall market pattern, it was not surprising assets under management at the ETF level were also highly concentrated. Only 512 of the 2,377 ETFs (primary share classes = portfolios= ETFs) held assets above €1.0 bn each. These ETFs accounted for €2,259.4 bn, or 85.04%, of the overall assets in the European ETF industry. The 10 largest ETFs in Europe accounted for €508.5 bn, or 19.14%, of the overall assets under management.
Graph 10: The 10 Largest ETFs by Assets Under Management, March 31, 2026 (Euro Billions)
Source: LSEG Lipper
Estimated Net Flows at the ETF Level
A total of 1,552 of the 2,540 ETFs (primary share classes = portfolios = ETFs) which were active in the European ETF industry over the course of Q1 2026 showed net inflows of more than €10,000 each for the first quarter, accounting for inflows of €161.6 bn. This meant the other 988 instruments faced no flows, or net outflows, for the month. Upon closer inspection, only 395 of the 1,552 ETFs posting net inflows enjoyed inflows of more than €100 m over the course of March—for a total of €138.4 bn. The best-selling ETF for Q1 2026 was Vanguard FTSE All-World UCITS ETF, which enjoyed estimated net inflows of €5.6 bn. It was followed by iShares Core MSCI Emerging Markets IMI UCITS ETF (+€2.6 bn) and Amundi Smart Overnight Return UCITS ETF (+€2.4 bn).
Graph 11: The 10 Best-Selling ETFs, January 1 – March 31, 2026 (Euro Billions)
Source: LSEG Lipper
The flow pattern at the fund level indicated there was a lot of turnover and rotation during the month, but it also showed the concentration of the European ETF industry even better than the statistics at the promoter or classification levels since the 10 best-selling ETFs account for inflows of €23.8 bn.
Given its size and the overall trend for net sales at the promoter level, it was surprising that only three of the 10 best-selling funds for Q1 2026 were issued by iShares. These iShares ETFs accounted for estimated net inflows of €5.8 bn.
The views expressed are the views of the author, not necessarily those of LSEG.
This article is for information purposes only and does not constitute any investment advice.
