European ETF Investors Hold Through March Volatility

European ETF investors largely held positions during March market volatility, with net inflows of €9.4bn that month and a rebound to €39.4bn in May, including €25.5bn into equity ETFs, according to Morningstar and BNP Paribas Asset Management data.

Jose Garcia-Zarate, Morningstar’s senior principal of manager research for EMEA, observed that equity ETF investors largely remained invested through the March swings. He commented that the flexibility of ETFs has not led to widespread short-term trading in the data.

BNP Paribas Asset Management reported that global equity ETFs drew €16.7bn in May. The firm noted that equity-focused funds accounted for a large share of the overall May inflows.

Ralph Williams, director of European insights at Broadridge, described two investor groups behind the flows: tactical, more sophisticated investors, and a growing retail cohort that often invests through automated savings plans in markets such as Austria and Germany. He indicated that tactical flows tend to shape monthly headlines while retail flows are steadier.

Morningstar data show that over the past three years equity investors have increasingly used ETFs, mainly passive strategies, while bond investors have continued to use active mutual funds more frequently. Garcia-Zarate highlighted that the uptake of the ETF wrapper has been stronger in equities than in fixed income.

Olivier Paquier, global head of AXA IM ETF sales at BNP Paribas Asset Management, described a change in the investor base over the last decade. He noted that institutional and professional users were once the dominant ETF clients, and that wealth managers and retail investors have become larger parts of demand. Paquier added that many investors still favour broad global equity exposures.

Market participants raised commercial challenges for active ETF launches, pointing to intense competition, high product-launch activity and some European investors buying U.S.-listed products directly. Those factors were cited as headwinds for new active ETF offerings.

Executives from several firms highlighted distribution and user experience as near-term priorities for the industry. They identified smoother onboarding at pension plans and brokerages, greater access via savings plans, clearer investor education and more intuitive trading platforms as areas of focus.

Data from March and May indicate recurring contributions and simple, diversified ETF strategies coincided with continued asset growth through recent market stress. The figures from Morningstar and BNP Paribas Asset Management show inflows persisted despite inflation, rate uncertainty and geopolitical tensions.