Flows in June ETFs lean towards bonds, commodities, and high-quality stocks
In June 2025, European Exchange-Traded Fund (ETF) investors demonstrated a clear preference for sectors offering growth potential and hedges against economic uncertainty. The month saw significant net inflows into equity, fixed income, and commodity ETFs, with a notable focus on defense-related equities, European fixed income, and precious metals.
**Equity ETFs**
Global, US, and emerging market equities attracted substantial assets, with thematic equity ETFs, particularly those focused on defense due to NATO spending commitments, and AI also seeing noteworthy demand. European equities benefited from increased interest, partly influenced by U.S. investors seeking value and dividend yield in sectors like defense, industrial automation, and banking. Passive equity ETFs led inflows in European equity, with €60 billion in Q2 2025, while active equity funds experienced outflows, reflecting a preference for low-cost passive equity exposure amid market volatility.
**Fixed Income ETFs**
June 2025 marked the strongest month since July 2024 for fixed income ETF inflows, with US$8.9 billion (around 37% of the month's total net new assets). Investors favoured European government and corporate bond ETFs, alongside higher yield sectors such as High Yield and Emerging Market (EM) government bonds, driven by expectations of a strengthening economic environment. Active bond funds saw EUR 50 billion of net inflows in Q2 2025, significantly outperforming passive bond fund inflows, indicating investor preference for active management in a changing monetary policy landscape.
**Commodity ETFs**
Commodity ETFs experienced a rebound, with US$3 billion of net new assets in June 2025. Precious metals ETCs like gold and silver attracted flows, serving as hedges against inflation and economic uncertainty amid growth slowdowns and expected USD weakness. This demand reflects concerns over inflation, economic outlooks, and geopolitical factors influencing commodity prices.
**Overall Asset Flows and Market Impact**
The ETF industry’s assets under management in Europe increased significantly in June 2025, driven both by market performance and net inflows, with total ETF AUM rising by approximately €691 billion to over €16 trillion globally, equity ETFs leading by assets under management. European funds recorded EUR 131 billion inflows in Q2 2025, down from EUR 161 billion in Q1, reflecting some moderation but still robust demand overall.
These trends highlight evolving investor preferences amid geopolitical uncertainty, economic outlook adjustments, and sector rotation toward defense and other growth-supportive areas in Europe. The industry's growth underscores the increasing importance of ETFs as investment vehicles in a dynamic and complex global economy.
[1] European ETF Flows Report Q2 2025, ETFGI [2] European ETF Market Review Q2 2025, Bloomberg Intelligence [3] European ETF Market Insights Q2 2025, BlackRock [4] European ETF Market Analysis Q2 2025, iShares [5] European ETF Market Data Q2 2025, Morningstar
Investors interested in the technology sector may find potential opportunities in thematic equity ETFs, such as those focused on artificial intelligence (AI), which saw noteworthy demand in the European market due to increased interest in Q2 2025.
Consequently, technology-focused active bond funds could also benefit, as investor preferences lean toward active management in a changing monetary policy landscape and a strengthening economic environment, leading to significant net inflows into European government and corporate bond ETFs, including those in the higher-yield sectors like High Yield and Emerging Market (EM) government bonds.
