European ETFs Have Seen Two Consecutive Months of Record Inflows
After a record July at 49.4 billion euros, the market for Europe-based exchange-traded funds (ETFs) saw an additional 43 billion euros in net inflows in August. The summer holidays clearly did not halt scheduled trades.
The figure is worth noting. Over the course of two summer months, exchange-traded funds (ETFs) regulated by the European UCITS Directive saw more than 92 billion euros in net inflows, even though this period is typically considered the slowest of the year for the markets. The mechanics of scheduled savings, automatic investment plans, and managed asset allocations now operate independently of the trading floor’s schedule.
In the equity market, investors favored the United States, according to the flow analysis published by Amundi. At the same time, they continued to diversify their portfolios through global exposures, which—given the weight of large U.S. stocks in global indices—often amounts to reinforcing the same region a second time without always realizing it.
This point is worth exploring, as it touches on the very definition of diversification. An investor who holds an S&P 500 index fund and a global index fund believes they have two distinct holdings. In reality, the second largely overlaps with the first, as U.S. stocks account for the majority of the market capitalization of global indices. Geographic diversification is achieved by subtraction—by adding what is missing—not by adding products that are similar.
The bond segment is split into two
Bond buyers’ behavior varied by region. In Europe, they focused on all maturities. In the United States, they preferred short-term maturities. This pattern is consistent with current interest rate expectations: investors are willing to lend to Europe for the long term but prefer to remain flexible with the dollar.
This distinction has practical implications for a French investor building a bond portfolio. Buying a long-term U.S. bond index fund means taking on interest rate risk and currency risk—two distinct risks that the simplicity of the product tends to obscure. The same reasoning applies to equity ETFs that are not currency-hedged, whose performance in euros depends as much on the dollar as it does on the companies in the portfolio.
The preference for European bonds across all maturities makes sense. The European Central Bank (ECB) has just raised its deposit rate to 2.50%, and eurozone sovereign yields have tightened, making it possible to lock in decent rates over long maturities. In the United States, the Federal Reserve’s decisions are still pending, and short-term maturities offer the flexibility to reposition quickly.
Liabilities continue to erode assets
Nothing in these figures suggests that index-based investing makes people wealthier. They show that new money is flowing heavily into low-cost products, and that the trade-off between cost and performance has been decided by European investors themselves before being addressed by their financial advisors. For a life insurance policy, the difference between a unit-linked product with an annual fee of 1.8% and an index fund with a fee of 0.2%, compounded over twenty years, amounts to tens of thousands of euros on an average-sized policy.
Gold also rode this wave, with 6.3 billion euros raised in August through exchange-traded products backed by the metal. The total since January—8.1 billion euros—already exceeds the 6.6 billion euros raised in all of 2025.
A useful point for French investors: index funds eligible for the stock savings plan (PEA) are primarily synthetic replication funds, which track the performance of a foreign index through a swap agreement with a bank. The mechanism works and is regulated, but it introduces a counterparty where a physically replicated fund actually holds the securities. Those who invest outside the PEA—in a securities account or through unit-linked funds—are not subject to this restriction and can choose funds that hold the stocks directly.
