European fund managers pulled in 161 billion euros in the first quarter of 2025, led by Blackrock and a surge in passive strategies. Bond funds added 83 billion euro, while equity funds saw softer inflows.
That is according to Morningstar’s latest quarterly report on fund flows, which shows passive funds continuing to gain ground, now accounting for nearly 30 percent of total fund assets in Europe. Blackrock cemented its lead with 30.5 billion euros in net inflows across open-ended and exchange-traded fund vehicles, representing around 2 percent of its total assets under management.
HSBC followed with 6.2 billion euros in net inflows, amounting to 4 percent of its assets under management. The gains reflect growing investor demand for short-duration bond strategies and flexible fixed income funds amid heightened macroeconomic uncertainty. Amundi, Vanguard and DWS also reported solid growth, supported by strong flows into global large-cap and European equity ETFs.
In contrast, Aberdeen (formerly Abrdn) and Eurizon each suffered outflows of 6 billion euros, equivalent to 9 percent and 4 percent of their assets respectively. Both firms have now recorded five consecutive quarters of asset losses, underlining the continued challenges faced by active managers in an environment increasingly dominated by low-cost, index-tracking strategies.
VanEck lifted by new defence ETF
VanEck entered the top ten providers by flows, lifted by a wave of investor interest in its defence ETF. The fund gathered more than 1.5 billion euros following announcements of expanded defence budgets across several European countries.
“Defence ETFs saw a surge in interest following increased defence spending announcements, though broader thematic funds have struggled overall as investor enthusiasm has gradually slowed,” said Giovanni Cafaro, analyst for fixed income strategies at Morningstar, in a statement.
Since mid-2023, thematic strategies have experienced cumulative outflows of 72 billion euros, with physical-world themes hit the hardest.
While active strategies posted their strongest quarterly gain since 2021, primarily in defensive and flexible fixed income categories, passive funds continue to capture the bulk of investor flows. The rotation out of US equities and into European strategies, after years of outflows, further benefitted asset managers with established ETF platforms.
Flows by asset class in Q1
for European Open-End and ETF market
Source: Morningstar’s Europe Open-End and ETF Flows — Q1 2025