At the same time, momentum in equity ETFs slowed, while fixed-income ETFs saw a sharp resurgence in demand.
The latest flow data suggests that investors are adopting a more selective positioning. While inflows remain robust, market participants are now showing greater sensitivity to the macroeconomic backdrop. Rising energy prices and inflationary concerns are weighing on the outlook for Europe, while bonds are regaining their appeal.
However, the situation is more nuanced than the headline figures suggest. Geopolitical uncertainty in the Gulf region is tempering risk appetite for Europe-exposed ETFs. That said, the region is starting from a high base: over the past twelve months, it has continued to attract more capital than the United States, despite the relatively moderate pace of the last two months.
Fixed Income: Portfolio Stabilizers
Furthermore, Stefan Kuhn notes that in the fixed-income segment, recent trends have been confirmed. Sovereign bonds remained in high demand, while interest in corporate credit softened somewhat.
He adds that investors are increasingly seeking to stabilize their portfolios. ETFs invested in sovereign bonds continue to play this role. Risk has not disappeared; it is simply being approached in a more targeted manner.
Fidelity: "Investors recalibrated their ETF portfolios in May"
According to Stefan Kuhn, Head of ETF Distribution, Europe, at Fidelity International, "the European UCITS ETF market continued to post solid net inflows in May, but the allocation shifted significantly across asset classes. With $43.6bn in net inflows, volumes settled well above short- and medium-term averages."
