Recapping ETF flows in Q4
Monthly flows into European ETFs maintained their impressive streak into year-end, with the US$98 billion in net new assets (NNA) gathered in Q4 taking the full-year total to a record-breaking US$373 billion. Total AUM closed 2025 at US$3.18 trillion, up 40% year-on-year.
Although broad asset class flows observed in December were almost perfectly aligned with the full-year breakdown – 74% into equities, 21% into fixed income and 5% into commodities – Q4 paints a slightly different picture, particularly when you look beneath the surface.
Equities – Emerging Market and Europe outperform
Global equity exposures dominated flows throughout the year, but demand for emerging market equities accelerated in Q4, pushing the US into third place. The US fell even further when isolating December, as demand for European equities saw a clear resurgence.
Fixed income – Captures almost a third of all ETF flows in Q4
Fixed income punched above its weight relative to the rest of the year. Cash management exposures, such as overnight return swap ETFs, continued to capture the lion’s share, likely reflecting stretched equity valuations and ongoing economic uncertainty.
Cash and Commodities – Strong year-end on risk off positioning
Despite outflows from physical gold ETPs in October, commodity flows turned positive in the final two months, ending the year on a high. Alongside gold ETPs, physical silver and broad commodity exposures also saw increased demand into year-end.
What to focus on this month
- Price of US exceptionalism
Weak USD diminishes returns of US assets for European investors. - Diversification trades
The attraction of gold and other low-correlated assets. - Cash rates likely to fall further
Interest rates are expected to be cut further in 2026.