- Total flows to mutual funds for March were €5.67bn: mutual fund flows (-€18.69bn) and ETFs
(+€24.36bn). Down from February’s net €76.91bn.
- Bond funds (+€12.16bn) were the best-selling asset type, followed by equity (+€6.98bn) and mixed-assets funds (+€3bn).
- ETFs continue to benefit from a rotation from mutual funds, as the former saw inflows of €24.36bn as the latter shed €18.69bn in March
- Equity Europe was the month’s best-selling classification (+€8.15bn), as Granola made ground at the expense of the Magnificent 7.
- Redemptions from Money Market USD (-€3.15bn): a reversal from February and January, when Money Market USD was among the top-10 money takers.
Investors Turn from the US to Europe in March, Dumping the Dollar
Unease spread among European fund buyers over the first quarter of 2025, even before the temperature over tariffs soared in early April.
Over Q1 2025, Europe, UK, emerging markets, Asia Pacific, and Japanese equity markets outperformed the FTSE All-World, while both US large- and small-caps lagged, particularly those with a growth bias. While Equity US funds are still in positive territory, both over the month and quarter, investors are taking money off the table in the US mid- and small-cap space.
With the US exceptionalism story under severe strain, investors have cast a covetous eye to European equities, and this has been reflected in the month’s fund flows. Not so, however, UK equities, which despite a strong relative performance over Q1 2025 still suffered large outflows.
The US equity rally, which had begun to narrow towards the end of last year—and which was generally reliant on the Magnificent 7 mega caps—went into reverse in Q1 2025. This is reflected in March’s fund flow data, with the hitherto popular USD money market funds also seeing reverses.
Among US large-caps, Tech and Discretionary, themselves major drivers of the US equity rally, posted steep losses, according to FTSE Russell analysis. More defensive industries such as Consumer Staples, Utilities, Telecoms and Healthcare outperformed, with large-cap Energy the third best-performing industry after Staples and Utilities. In these conditions, Equity Sector Industrials fund flows had an unusually positive month.
Asset Type Flows
Asset Type Flows March 2025
Graph 1: Estimated Net Flows by Asset and Product Type – March 2025 (€bn)
Source: LSEG Lipper
Total flows to mutual funds for March were €5.67bn. This breaks down to: mutual fund flows (-€18.69bn) and ETFs (+€24.36bn). So, much more subdued when compared with February’s net €76.91bn.
Bond funds (+€12.16bn) were the best-selling asset type overall for the month, followed by equity (+€6.98bn) and mixed-assets funds (+€3bn), then commodity funds (+€0.54bn) and alternatives (+€0.24bn). Money market funds (MMFs) reversed their strong flows of the previous month to see large redemptions (-€16.4bn) with real estate funds also in the red (-€0.83bn).
Given the risk-on sentiments of markets currently, the MMF redemptions may seem a little odd—and indeed they are rather idiosyncratic, as can be seen on Graph 4. The devil, as ever, is in the detail.
Asset Type Flows Year to Date
Graph 2: Estimated Net Sales by Asset and Product Type, January 1 – March 31, 2025 (€bn)
Source: LSEG Lipper
Estimated overall net flows in the European fund industry were €187.61bn for the first quarter of the year, breaking down to €87.11bn for mutual funds and €187.61bn for ETFs.
Bond funds are the largest beneficiaries of these inflows to date (+€68.52bn, with +€59.24bn of this into mutual funds), followed by equities (+€64.68bn and -€6.65bn respectively). Next, MMFs (+€45.84bn and +€40.35 respectively). Given a month that’s been unkind to both stocks and bonds, this overtaking of MMFs by bond funds seems a little odd.
Last month we speculated that rate cuts would pull the short end of the yield curve down, while increasing fiscal commitments would act as an upward pressure further out on the curve, and that is indeed happening. Whether that explains the outflows from cash and inflows to bonds is (as yet) another thing, given the distorting effect of Turkish lira MMF outflows (see Graph 4) is another thing altogether.
As was the case last month, flows for all other asset types fall considerably behind: with mixed assets (+€10bn), commodity (€1.57bn), and alternatives (+€0.41bn) funds seeing modest YTD inflows, as “other” (-€0.51bn), and real estate (-€2.9bn) saw redemptions.
Fund Flows Active vs Passive Products
Graph 3: Estimated Net Flows by Management Approach and Product Type, March 2025 (LHS);
January 1 – March 28, 2025 (RHS). €bn
Source: LSEG Lipper
ETFs continue to benefit from a rotation from mutual funds, as the former saw inflows of €24.36bn as the latter shed €18.69bn in March (+€87.11bn versus +€100.5bn, respectively, YTD).
ETFs still lag active mutual funds, as can be seen from graph 3, above. However, that picture changes markedly when MMFs are stripped out. YTD, flows to long-term assets in ETFs were €81.61bn with the bulk of this going to equity ETFs, while mutual funds’ share of long-term asset flows was €60.15bn, including both trackers and actively managed funds.
Fund Flows by Lipper Global Classifications
Fund Flows by Lipper Global Classifications, March 2025
Graph 4: Ten Best- and Worst Lipper Global Classifications by Estimated Net Sales, March 2025 (€bn)
Source: LSEG Lipper
With investors looking for alternatives to US equities, it’s unsurprising to see Equity Europe as March’s best-selling classification (+€8.15bn), as Granola makes ground at the expense of the Magnificent 7. Equity German Small & Mid Cap also seems to be benefitting from the same sentiment (+€1.59bn).
Target Maturity Bond EUR 2020+ is a perhaps unusual entrant in second place (+€6.86bn), with the bulk of this going to one share fund.
Despite MMFs being in negative territory for the month, European investors still saw value in Money Market GBP allocations (+€3.9bn), along with Money Market EUR (+€1.82bn).
The Turkish lira has been in long-term decline, but higher central bank rates in 2024 tempted investors, from investment banks to hedge funds, into the currency. The lira had trended up against the euro since late summer, but then resumed its downward journey from mid-January, and investors have pulled their cash from Money Market TRY funds, making an appearance at the far right of the graph in February’s report, and once again in March (-€14.74bn).
Given news flow around the weakening US dollar, it’s less surprising to see outflows from Money Market USD (-€3.15bn). That’s a significant turnover since February and January’s reports, when Money Market USD were among the top-10 money takers. Then, we noted “This clearly isn’t a one-way street, as investors are having to play off pressure on the Fed to drop rates off the back of a weakening economy versus the greenback’s status as a haven currency, and the still attractive rates on cash”. So less of a “not a one way street”, and more a handbrake-turn in the middle of the road in February.
Equity US is still in positive territory over the month (+€0.6bn), with investors taking US risk off the table by existing Equity US Small & Mid Cap funds (-€2.13bn), and tech’s recent poor performance was seen via Equity Sector Information Tech redemptions (-€3.04bn).
Fund Flows by Lipper Global Classifications, Year to Date
Graph 5: Ten Best- and Worst Lipper Global Classifications by Estimated Net Sales, January 1 – March 31, 2025 (€bn)
Source: LSEG Lipper
Equity Global is the best-selling classification over Q1 (+€29.57bn). And, despite March’s reversal, Money Market USD makes second place (+€22.3bn), followed by Money Market EUR (+€21.3bn). March’s moves put Equity Europe (+€14.91bn) ahead of Equity US (+€14.8bn).
As we’ve explained elsewhere, the strong positive sales for Target Maturity Other (+€9.21bn) and the outflows for Mixed Asset GBP Aggressive (-€3.34bn) are likely in part a reallocation within the fund suite of one specific large asset manager, and MA GBP Aggressive bouncing back into the top-10 in March.
Despite UK equity’s strong first quarter—beating the US and global indices—it remains in the dog box, with Equity UK (-€6.24bn) and Equity UK Small & Mid Cap (-€2.29bn) deep in negative territory.
Fund Flows by Promoters
Fund Flows by Promoters, March 2025
Graph 6: Ten Best-Selling Fund Promoters in Europe, March 2025 (€bn)
Source: LSEG Lipper
JPMorgan (+€10.96bn) was once more the best-selling fund promoter in Europe for March. While that’s broadly in line with the February figures, others saw a reduction in volume overall. BlackRock follows (+€4.45bn–€8.82bn to ETFs), DWS (+4.11bn), Vanguard (+€3.19bn, +€2.41bn of which to ETFs), and State Street (+€2.96bn, with +€0.88bn to ETFs).
Fund Flows by Promoters, Year to Date
Graph 7: Ten Best-Selling Fund Promoters in Europe, January 1 – March 31, 2025 (€bn)
Source: LSEG Lipper
BlackRock retains its lead YTD (+€28.56bn), heavily reliant on its ETF flows (+€31.02bn), ahead of JPMorgan (+€26.55bn), followed by DWS (+€16.82bn), and Vanguard (+€11.84bn), the latter’s March sales pushing it up the Q1 table.
