Investors piled record amounts into European exchange-traded investment funds at the start of 2025 as capital flowed out of US assets, fresh data suggests.
US President Donald Trump’s imposition of tariffs on imports from around the world has seen investors reposition their exposure away from the country.
During the opening three months of the year, the European ETF market saw inflows of $93billion of net new assets as Trump threatened and later imposed tariffs on trade partners, according to figures from Invesco.
These inflows were ahead of the previous record of $91billion set in the fourth quarter of 2024, during which Trump won the US election.
Tariffs currently stand at 10 per cent across the board, with reciprocal tariffs paused for a 90-day period on 9 April.
Gary Buxton, head of EMEA ETFs at Invesco, said: ‘The valuation case for European equities remains supportive, and growing concerns over concentration risk amongst global and US indices could prompt investors to continue looking to Europe to diversify.’
European focused ETFs have seen record inflows in the first quarter of 2025
Invesco said European ETF assets under management now stands at $2.38trillion as at the end of the first quarter.
The increase in AUM comes as a result of strong performances from gold, commodities and fixed income, while equity returns were largely flat.
European-exposed ETFs saw a record of $19.4billion in inflows during the same period, accounting for a fifth of net new assets in the first quarter, making it the largest category for flows.
Invesco said these inflows were predominantly driven by demand for European equities.
The uncertainty surrounding Trump’s tariff decisions has seen investors rebalancing their portfolios away from US equities towards European alternatives.
Broader European equity products saw inflows of $11.4billion and German equity ETFs saw $5billion worth of inflows.
Meanwhile, US equities saw outflows of $4.5billion, with March alone accounting for $2.2billion, as investors continue to increasingly shun US markets in favour of Europe.
Gold has also seen inflows during the period, with gold ETPs seeing inflows over the past four months.
The yellow metal was the best performing asset in the first quarter, Invesco said, with a return of 19 per cent as investors flocked towards the ‘safe haven’ asset as equity markets tumbled.
Buxton added: ‘So long as uncertainty persists, the case for gold will remain strong.
‘Gold has demonstrated low correlation with equities and other risk assets, and also tends to hold up well during times of increased equity market volatility (in risk-off conditions) and uncertainty.’
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