European ETFs Report A Record Of Over $10 Billion In Inflows

This renewed interest in European ETFs shows a major swing in sentiments as the funds have recorded a net outflow of $6.4 billion since 2022.

European stocks are emerging as a bright spot amid the growing global economic tensions and the Trump tariffs, as US investors put in a record $10.6 billion into exchange-traded funds (ETFs) in the first quarter. As per BlackRock data, this figure is seven times more than the amount recorded last year during the same period. 

This ray of hope has prompted the Founder and Chief Investment Officer of Seymour Asset Management Tim Seymour to describe this as an attempt to Make Europe Great Again or MEGA, which is an obvious slight at Trump’s famous war cry- Make America Great Again (MAGA). This renewed interest in European ETFs shows a major swing in sentiments as the funds recorded a net outflow of $6.4 billion since Russia’s invasion of Ukraine in 2022. 

In the last five years, for three of them, investors had directed all their capital out of European ETFs that trade in the US and into domestic stocks, particularly tech giants like Nvidia, whose value has been soaring. Reuters reported that Seymour, who is also a portfolio manager of the Amplify International Enhanced Dividend ETF, while investors are unlikely to give up their US stocks, they are rediscovering international, particularly European stocks after almost a decade. 

He added that this shift is different from the ones in recent years, citing Europe’s deregulation, which is happening at a faster pace than the US, along with domestic financial policies, like the German fiscal announcements as drivers for these massive investments.  

This year, iShares MSCI Germany ETF has recorded more than $1 billion in net inflows resulting in the fund’s total assets under management to double. This was a record for the 29-year-old ETF, according to a Reuters report. 

Defence stocks have roused considerable investor interest this year, as European leaders called on more military spending. The continent is preparing itself against any possible aggression, with European Council President Antonio Costa calling for better defence, and adding that ‘peace without defence is an illusion.’  

Since Russia invaded Ukraine, Western European countries have been more alert than ever. Trump’s efforts to end the war have also not eased the leaders’ concerns, as Europe understands the US President can step back any minute to redirect his focus to America’s domestic and international interests and challenges. 

The US had been the primary guarantor of Europe’s security since the Second World War, but Washington is now shifting its attention towards the Indo-Pacific reason, and Trump is adamant that the continent’s security will be financed by European countries, and he has urged the leaders to increase their contribution to NATO. 

While US ETFs have dominated the market, 2025 saw European ETFs outperform their Western counterparts. The Financial Times reported that European stocks have exceeded the performance of US stocks by more than 10% since the beginning of this year, despite Trump’s America First policies. 

Along with Germany’s decision to relax fiscal restraint, China’s economic rebound has also helped European exports. These, coupled with increased defence expenditure across Europe have facilitated this boom in the market.  

While the environment has been conducive to the improvement of European ETFs, the US markets are facing certain hiccups. European investors have been moving away from US equity ETFs, with Europe-based ETFs that have invested in U.S. equities recording outflows of $510 million in February. This was a drastic shift in a short period, as in November 2023, these funds recorded inflows of $22.8 billion. 

While US equities have not completely lost their investors’ loyalty, these figures do represent a diversification of capital into the European and US markets. Geopolitical developments have caused European ETFs to expand, but if the tides turn, the same reasons can cause the inflows to diminish. Market observers and investors are treading with caution during these volatile times.