A sharp divergence in investor sentiment has emerged in the ETF market, with money flooding into US-focused funds while European equities suffer a third consecutive month of outflows, according to data from etfbook.com analysed by Fidelity International.
North American equity ETFs listed in Europe attracted £14.7bn in June — more than three times the monthly average over the past year. The surge was driven largely by demand for artificial intelligence-themed funds, with the US remaining the dominant player in the sector. A boost also came from SpaceX's record-breaking initial public offering in June.
In contrast, Europe-listed ETFs targeting European stocks saw £2.2bn in outflows. Stefan Kuhn, European head of ETF and index distribution at Fidelity International, said: 'The story of the second quarter was the return of the United States. While investors were allocating more heavily to Europe at the start of the year, we are now seeing a clear preference for the US market again.'
Despite the regional divergence, overall European ETF flows were robust in June, attracting nearly £45bn — 29% above the three-month average and 19% above the 12-month average. Kuhn attributed this to strong corporate earnings and record equity market highs boosting investor confidence.
Commodity ETFs saw waning demand as gold prices fell, with expectations of higher US interest rates and easing geopolitical tensions in Iran reducing the precious metal's appeal. Meanwhile, actively managed ETFs enjoyed a record month for inflows, as investors increasingly seek to differentiate between winning and losing sectors and companies.