• European-domiciled ETFs posted net inflows of $13.0 billion in April, as equity and fixed income ETFs added $8.1 billion and $4.8 billion, respectively.
• Against an uncertain market backdrop, core equity ETFs had strong inflows and fixed income ETFs in general saw a rise in popularity.
• The Vanguard UCITS ETF range captured net inflows of $3.0 billion in April, with the majority of ETFs in the range recording positive flows.

Monthly recap: Investors continue to favour core equity ETFs despite market wobbles

Both equity and bond markets fell in April, as investors digested the possibility of central banks keeping interest rates higher for longer. In the US, inflation data came in higher than anticipated and the economy still looks strong, suggesting the US Federal Reserve (Fed) is not looking to lower rates any time soon. At Vanguard, we think it’s unlikely that the Fed will cut rates in 2024 – although the European Central Bank could be closer to lowering rates, leading to the prospect of policy divergence.

Against this uncertain backdrop, net inflows continued into European-domiciled ETFs. Indeed, we actually saw greater total inflows compared to March. Core equity ETFs were again the dominant driver, attracting $10.5 billion, far ahead of any other individual category of equity or bond ETF exposure we track. On a regional basis, investors favoured developed markets, the United States and Japan. Sustainable and smart beta ETFs fell out of favour, while emerging market equity ETFs also weathered outflows.

Flows into fixed income ETF exposures picked up in April, totalling $4.8 billion (compared to $1.3 billion in March). Most of the bond categories we track captured net inflows, particularly government exposures, which had almost $2 billion of net inflows. Ultra-short exposures continued to be popular with investors, which we might expect given concerns that the Fed may hold off on rate cuts. We saw fairly limited outflows across fixed income ETFs, though emerging market government bond ETFs saw a fourth straight month of net outflows to start the year.

Multi-asset ETFs picked up net inflows of $43 million in April, while commodity ETFs and alternatives ETFs gathered net inflows of $33 million and $7 million, respectively. Despite the positive flows last month, all three ETF asset class categories are still in the red for the year to date.

Total ETF market flows

European-listed ETF inflows continue in April

European ETF cumulative flows – cumulative 12 months by asset class ($ billion)

Source: ETFbook, as at 30 April 2024.

Equity ETFs

Core equity ETF inflows dominate, sustainable and smart beta suffer outflows

Equity flows by category: Month to date ($ million)

Source: ETFbook, as at 30 April 2024. The ‘segment’ category includes equity exposures which target specific market capitalisation segments, such as small-cap, mid-cap and large-cap. The ‘market access’ category includes difficult-to-access markets such as emerging markets. The ‘basket’ category includes strategies that combine several stocks as the underlying exposure, such as FAANG stocks.

While we saw net inflows across almost all equity ETF categories last month, flows in April showed more divergent investor views. Core equity ETFs again dominated, hauling in $10.5 billion during April–nearly eight times the next highest category–and bringing the YTD total to $43.1 billion. Sector equity ETFs captured net inflows of $1.3 billion, while segment ETFs attracted $375 million. On the negative side, sustainable equity ETFs suffered net outflows of -$2.4 billion, while smart beta and thematic ETFs lost assets of -$1.5 billion and -$237 million, respectively.

Developed market, US and Japan equity ETFs drive net inflows

Equity flows by geographic exposure: Month to date ($ million)

Source: ETFbook, as at 30 April 2024. The ‘world’ category excludes emerging markets.

Developed market, United States and Japan equity ETFs registered the highest net inflows with $2.3 billion, $1.5 billion and $1.3 billion, respectively. US equity ETFs have now posted four straight months of net inflows to start 2024, totalling $16.8 billion, although April’s total marks the lowest of the year. In terms of net outflows, the biggest losers were emerging markets (-$583 million), the Nordics (-$575 million) and Europe ex UK (-$445 million). 

Fixed income ETFs

Government and ultra-short maturity ETFs see highest inflows in April

Fixed income flows by category: Month to date ($ million)

Source: ETFbook, as at 30 April 2024.

April was a relatively strong month for fixed income ETF flows, as most categories captured net inflows. Total monthly net inflows of $4.8 billion were higher than either March or February, though some ways off from the exceptional inflows seen in January of $8.4 billion. Government bond ETFs easily topped the table in April, gathering net inflows of $2.0 billion, after net outflows of -$437 million in March. Ulta-short maturity ETFs picked up $1.5 billion of net inflows, marking four months of positive flows to start the year for a YTD total of $7.3 billion. Only inflation-linked bond ETFs saw notable net outflows in April, losing -$117 million. 

Investors again favour eurozone and US bond ETFs while shunning emerging markets

Fixed income flows by geographic exposure: Month to date ($ million)

Source: ETFbook, as at 30 April 2024.

In April, we saw positive flow trends continue across eurozone, United States and global bond ETFs, as each segment has seen four months of positive flows to start the year. Eurozone bond ETFs brought in $2.4 billion of net inflows in April, bringing the YTD total to $9.6 billion. US bond ETFs tacked on $1.4 billion of net inflows in April for a YTD total of $5.4 billion, while global bond ETFs have brought in $3.6 billion YTD after $481 million of net inflows last month. United Kingdom bond ETFs had net inflows of $751 in April. On the negative side of the ledger, emerging market bond ETFs posted a fourth consecutive month of net outflows, losing -$326 million in April to bring the YTD total to -$1.8 billion. 

Vanguard UCITS ETFs

Vanguard range sees net inflows of $3.0 billion in April 

Vanguard UCITS ETF net flows: Month to date ($ million)

Source: ETFbook, as at 30 April 2024.

The Vanguard UCITS ETF range captured net inflows of $3.0 billion in April, with the majority of ETFs in the range recording positive flows. Inflows were split between Vanguard’s equity UCITS ETF range ($2.4 billion) and fixed income UCITS ETF range ($640 million), while the multi-asset UCITS ETF range saw net inflows of $29 million.

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