The European ETF industry enjoyed strong inflows over the course of the first half of 2025.
The first half of 2025 was not easy to navigate for investors since the announcement of possible tariffs by the U.S. president sent shockwaves through stock markets around the world. As a result, investors around the globe acted nervous over any political and economic news, especially by the announcements around the new tariff regime by the U.S. president and potential tit-for-tat reactions from the markets which are the targets of the new tariffs. That said, the tariffs are seen as a kind of trade war between the U.S. and the rest of the world, especially China, by some market observers.
When it comes to equities, investors were concerned about the impact of any new tariffs on the growth expectations of literally all economies around the globe. In addition to this, investors were also concerned about the impact of new tariffs on the profitability of all kinds of companies, as well as on the impact of tariffs on inflation around the globe. That said, the U.S. stock market showed the fastest recovery in history from its low reached on April 8, 2025, even as several companies couldn’t give investors any guidance on future earnings since the impact from possible tariffs is still unknown.
Additionally, the increasing tensions in the Middle East also impacted investor sentiment, especially the intensifying conflict between Israel and Iran, since this had the potential to become a broader conflict in the region and could drive up the price for oil. That said, the swings in the price for oil during this conflict was more stable than investors have expected. This was because no oil production sites were hit by military actions in the region and the shipping route through the Strait of Hormuz stayed open.
Nevertheless, the war in Ukraine and the increasing number of conflicts around the world let to a defense spending spree in Europe. The respective announcements by the single governments over the course of the first five months of the year let to a bull market for defense-related stocks. Furthermore, the NATO member states agreed in June 2025 to increase their defense spending from 2.0% to 5.0% of their GDPs.
Meanwhile, central banks around the globe tried to adjust their policies to the current environment. While the European Central Bank (ECB) has further cut interest rates and reached its target rate of 2.0%, the same is somewhat true for the Bank of England, where the interest rate still stands at 4.25%, and Swiss National Bank, which has reached 0.0%. Conversely, the Bank of Japan (BoJ) had to increase its interest rates to 0.5%. The U.S. Federal Reserve left its interest rates (4.25% to 4.50%) unchanged over the course of the first six months of 2025 despite some pressure to lower rates from the government. These decisions reflect central banks’ efforts to navigate economic challenges, including trade tensions, inflationary trends, and the high market volatility, to support their local economies.
Nevertheless, fears of increasing debt in the U.S. put some pressure on the U.S. bond market, as investors fear increasing interest rates because of increasing debt. That said, the downgrade of the U.S. by Moody’s on May 16, 2025, also contributed to these fears. When it comes to this, it is not surprising that the U.S. dollar has weakened against other major currencies despite the relatively high interest rate in the U.S.
More generally speaking, aside from the geopolitical tensions there is only a very limited number of indicators which are sending negative signals for economic growth in the U.S. and other major economies around the world. With regard to this, it is noteworthy that most of these negative indicators are being offset by positive signals from other indicators. Nevertheless, some major economies, such as Germany, lack economic growth and may need lower interest rates and/or increased government spending as stimulus. Despite these headwinds, the positive effects of lower interest rates seem to be more important for investors than the current state of some economies.
Assets Under Management in the European ETF Industry
From an ETF industry perspective, the performance of the underlying markets led, in combination with the estimated net flows, to increasing assets under management (from €2,081.8 bn as of December 31, 2024, to €2,198.4 bn at the end of June 2025). At a closer look, the increase in assets under management of €116.7 bn for the first half of 2025 was driven by the estimated net inflows (+€152.4 bn), while the performance of the underlying markets contributed (-€35.7 bn) to the assets under management.
For more information on the growth drivers of the assets under management in the European ETF industry, please read the article: European ETF Industry – The Drivers for the Growth in Assets Under Management Analyzed
Graph 1: Assets Under Management in the European ETF Industry, January 1, 2000 – June 30, 2025 (Euro Billions)
Source: LSEG Lipper
As for the overall structure of the European ETF industry, it was not surprising equity ETFs (€1,657.1 bn) held the majority of assets, followed by bond ETFs (€421.1 bn), money market ETFs (€65.5 bn), commodities ETFs (€42.2 bn), alternatives ETFs (€8.4 bn), and mixed-assets ETFs (€4.2 bn).
Graph 2: Market Share, Assets Under Management in the European ETF Industry by Asset Type, June 30, 2025
Source: LSEG Lipper
ETF Flows by Asset Type
The European ETF industry enjoyed estimated net inflows (+€152.4 bn) over the course of the first six months of 2025. The strong inflows may lead to a new record for estimated net flows if the European ETF industry continues to gather assets at the same pace over the course of the second half of 2025.
The inflows in the European ETF industry for H1 2025 were driven by equity ETFs (+€116.7 bn), followed by bond ETFs (+€21.9 bn), money market ETFs (+€10.8 bn), alternatives ETFs (+€1.4 bn), commodities ETFs (+€1.2 bn), and mixed-assets ETFs (+€0.5 bn).
Graph 3: Estimated Net Sales by Asset Type, January 1, 2025 – June 30, 2025 (Euro Billions)
Source: LSEG Lipper
As graph 4 depicts, equity ETFs enjoyed inflows in each of the six months of the first half of 2025, while bond ETFs faced outflows in March and April. Nevertheless, the graph also shows that the flows in bond ETFs have normalized after the market digested the downgrade of the U.S. by Moody’s and the insecurities around increasing future government debt in the U.S. and other major economies around the globe. In addition to this, the graph shows that the inflows in equity ETFs were somewhat stable over the course of Q1 and slowed down over the course of Q2 2025.
Graph 4: Monthly Estimated Net Sales by Asset Type, January 1, 2025 – June 30, 2025 (USD billions)
Source: LSEG Lipper
The trend for the estimated net flows over the course of Q1 2025 was somewhat surprising given the uncertainty of the markets with regard to impact of the future economic growth of the new tariff regime in the U.S. which was scheduled to be introduced at the beginning of April and the increasing government debt in major economies around the globe. That said, the insecurities over the future economic environment with regard to the effects caused by possible tariffs and higher debt could be seen in the estimated net flows in the European ETF industry over the course of Q2.
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 June 2025, the European ETF market was split into 178 different peer groups. The highest assets under management at the end of June were held by funds classified as Equity U.S. (€535.9 bn), followed by Equity Global (€400.2 bn), Equity Europe (€107.4 bn), Equity Emerging Markets Global (€95.6 bn), and Equity Eurozone (€80.1 bn). These five peer groups accounted for 55.45% of the overall assets under management in the European ETF segment, while the 10-top classifications by assets under management accounted for 65.40%.
Overall, 17 of the 178 peer groups each accounted for more than 1% of assets under management. In total, these 17 peer groups accounted for €1,649.5 bn, or 75.03%, of the overall assets under management.
Graph 5: Ten Largest Lipper Global Classifications by Assets Under Management, June 30, 2025 (Euro Billions)
Source: LSEG Lipper
In addition, it was noteworthy that 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.
The peer groups on the other side of the table showed some funds in the European ETF market are quite low in assets and their constituents risk 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 10 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, June 30, 2025 (Euro Billions)
Source: LSEG Lipper
Estimated Net Flows by Lipper Global Classifications
The net inflows of the 10 Lipper global classifications with the highest estimated net inflows for the first half of 2025 accounted for €106.5 bn. In line with the overall sales trend for H1 2025, equity peer groups (+€91.5 bn) gathered the majority of flows by asset type on the table of the 10 Lipper global classifications with the highest estimated net inflows. Given the overall fund flow trend in the European ETF industry, it was not surprising that Equity Global (+€35.7 bn) was the best-selling Lipper global classification for H1 2025. It was followed by Equity Europe (+€15.1 bn) and Equity U.S. (+€12.6 bn).
It was quite surprising to see that Equity Europe enjoyed higher inflows than Equity U.S. over the course of H1 2025 since European investors have pulled money out of Equity Europe over the course of the previous years. That said, the inflows into Equity Europe and Equity Eurozone (+€8.6 bn) might be a new trend in the European ETF industry.
These numbers showed the European ETF segment is also highly concentrated when it comes to fund flows by sector. Generally speaking, one would expect the flows into ETFs to be concentrated since investors often use ETFs to implement their market views and short-term asset allocation decisions. These products are made and, therefore, are easy to use for these purposes.
Graph 7: Ten Best- and Worst-Lipper Global Classifications by Estimated Net Sales, June 2025 (Euro Billions)
Source: LSEG Lipper
On the other side of the table, the 10 peer groups with the highest estimated net outflows for June accounted for €6.3 bn in outflows.
Equity U.S. Small & Mid Cap (-€3.1 bn) was the Lipper Global Classification with the highest outflows for H1 2025. The category was bettered by Bond USD Government (-€1.8 bn) and Bond USD Corporates (-€1.7 bn).
Insights into the ETF Flows by Lipper Global Classification
As said before, it was not surprising that Equity Global (+€35.7 bn) was the best-selling Lipper global classification for 2025 so far. This is because Equity Global is steadily in one of the two top spots on the monthly tables of the best-selling Lipper classifications. The leading classification was followed by Equity Europe (+€15.1 bn) and Equity U.S. (+€12.6 bn). The positioning of Equity Europe and Equity U.S. on the table of the best-selling Lipper classifications proves that European investors have slowed down when it comes to investing in U.S. equities while at the same time building up their positions in European equities. This is especially true if one takes also takes into account the inflows into Equity Eurozone (+€8.6 bn).
Equity Sector Industrials (+€9.6 bn) was the fourth best-selling Lipper classification for the first six months of 2025. The inflows in the classification were driven by ETFs investing in defense-related stocks (+€7.5 bn) 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.
Overall, European investors prefer large caps over small and mid-caps despite a possible need for diversification in their portfolios. Nevertheless, European investors were overall buyers of small & mid-caps (+€0.2 bn). That said, the flows differed widely between the different Lipper classifications. While Equity Germany Small & Mid-Cap (+€2.9 bn), Equity Global Small & Mid-Caps (+€0.9 bn), and Equity Eurozone Small & Mid-Caps (+€0.4 bn) enjoyed inflows, Equity U.K. Small & Mid-Caps (-€1.0 bn) and Equity U.S. Small & Mid-Caps (-€3.1 bn) faced outflows.
By looking at the flows into money market products over the course of 2025 so far, it is not surprising to see Money Market EUR (+€6.9 bn) outpacing Money Market USD (+€3.8 bn) on the list of the best-selling Lipper classifications given the current trend of a weakening U.S. dollar compared to the euro.
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 30 of the 64 ETF promoters in Europe holding assets at or above €1.0 bn. The largest ETF promoter in Europe—iShares (€939.8 bn)—accounted for 42.75% of the overall assets under management, far ahead of the number-two promoter—Amundi ETF (€280.9 bn)—and the number-three promoter—Xtrackers (€235.7 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, June 30, 2025 (Euro Billions)
Source: LSEG Lipper
The 10-top promoters accounted for 93.46% of the overall assets under management in the European ETF industry. This meant, in turn, the other 54 fund promoters registering at least one ETF for sale in Europe accounted for only 6.54% of the overall assets under management.
Fund Flows by Promoters
Since the European ETF market is highly concentrated with regard to the assets under management by promoter, it was not surprising that nine of the 10 largest promoters by assets under management were among the 10-top selling ETF promoters for H1 2025. As to be expected, iShares was the best-selling ETF promoter in Europe for June (+€54.5 bn), ahead of Vanguard (+€17.9 bn) and Amundi ETF (+€17.8 bn).
Graph 9: Ten Best-Selling ETF Promoters, H1 2025 (Euro Billions)
Source: LSEG Lipper
The flows of the 10-top promoters accounted for estimated net inflows of €75.7 bn. As for the overall flow trend in H1 2025, it was clear that some of the 64 promoters (10) faced estimated net outflows (-€0.1 bn in total) over the course of the first half of 2025.
Assets Under Management by ETFs
There were 4,300 instruments (primary share classes [2,143] and [convenience] share classes [2,157]) listed as ETFs in the Lipper database at the end of June. Regarding the overall market pattern, it was not surprising assets under management at the ETF level were also highly concentrated. Only 438 of the 2,143 ETFs (primary share classes = portfolios) held assets above €1.0 bn each. These ETFs accounted for €1,837.9 bn, or 83.60%, of the overall assets in the European ETF industry. The 10 largest ETFs in Europe accounted for €437.5 bn, or 19.90%, of the overall assets under management.
Graph 10: The 10 Largest ETFs by Assets Under Management, June 30, 2025 (Euro Billions)
Source: LSEG Lipper
Estimated Net Flows by ETFs
A total of 1,405 of the 2,143 primary share classes analyzed in this report showed net inflows of more than €10,000 each for H1 2025, accounting for inflows of €220.6 bn. This meant the other 738 instruments faced no flows or net outflows for the first half of 2025 (When looking at these numbers one needs to bear in mind that some ETFs do not report their assets under management. This means Lipper can’t calculate fund flows for these ETFs). Upon closer inspection, only 410 of the 1,405 ETFs posting net inflows enjoyed inflows of more than €100 m during H1 2025—for a total of €196.4 bn. The best-selling ETF for H1 2025 was iShares Core MSCI World UCITS ETF, which enjoyed estimated net inflows of €6.4 bn. It was followed by Vanguard FTSE All-World UCITS ETF (+€5.7 bn) and iShares Core S&P 500 UCITS ETF (+€4.7 bn).
Graph 11: Ten Best-Selling ETFs, H1 2025 (Euro Billions)
Source: LSEG Lipper
The flow pattern at the fund level indicated there was a lot of turnover and rotation during H1 2025, 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 €40.6 bn.
Given its size and the overall trend for net sales at the promoter level, it was somewhat surprising that only four of the 10 best-selling ETFs for H1 2025 were promoted by iShares. These iShares ETFs accounted for estimated net inflows of €17.1 bn. Nevertheless, this shows that the competition in the European ETF industry allows other promoters to join the list of the 10 best-selling ETFs in Europe.
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 Lipper or LSEG.
