European equity investment trends persisted in May, as highlighted by Amundi's data.
Investors allocated a staggering €70.2 billion to equity and fixed income strategies in May, with a significant portion, over €4.5 billion, being directed towards all-country indices and all-maturity strategies, according to Amundi's latest monthly flows analysis. This strong investor appetite for European and global equities was influenced by several key factors.
Improved investor sentiment was a major driver. Global markets posted gains led by equities, driven by positive developments such as the partial rollback of US-China tariffs and a Middle East ceasefire proposal. These geopolitical improvements helped bolster risk appetite among investors, encouraging flows into risk assets like equities.
There was also a noticeable rotation away from US strategies towards European equities and fixed income. This strategic shift contributed to significant inflows into European-domiciled UCITS ETFs, which recorded €27bn of inflows in May, with €18.7bn into equities alone.
The preference for diversified equity exposure was another factor. There were positive flows not only into European but also global, US, and emerging market equities, reflecting broad-based demand for equity exposure across regions.
While equity flows were strong, investors also favoured USD-denominated corporate and aggregate debt. This balanced appetite for growth and income asset classes helped underpin positive sentiment in equities.
In May, equity funds netted +€23.8bn, split between mutual funds and ETFs, demonstrating robust investor interest. This was alongside strong flows into bond funds, showing demand for both growth and defensive asset classes.
Developed world strategies gained €4.3 billion, while fixed income allocations in European Ucits ETFs increased by a fourfold increase over the previous month, amounting to €8.3 billion. Euro-denominated long-dated bonds attracted €0.5 billion, and government bonds were the leading segment in fixed income, attracting €3.9 billion.
Investor appetite for European and global equities accounted for over 70% of total equity ETF inflows in May. Euro-denominated government bonds received €0.9 billion, and investment-grade corporate bonds returned to favour, bringing in €2.4 billion after outflows in April.
Sector allocations reflected confidence in Europe's industrial base, with industrial Ucits ETFs receiving €1.2 billion. ESG equity ETFs saw €1.9 billion in net inflows during May, while ESG fixed income indices attracted €2.4 billion overall, with €1.5 billion flowing into investment-grade strategies and €0.7 billion into high-yield.
Flows into gold exchange-traded commodities were flat in May, and multi-currency government bond strategies topped the list with €2.4 billion in net new assets. Developed market indices attracted €4.8 billion in May, and short-dated bonds received €0.3 billion.
Global ETF flows reached €120.8 billion during May, with USD government debt receiving €0.5 billion. European-domiciled Ucits ETFs captured €27 billion in net inflows, making May a month of robust investor demand for European and global equities and fixed income strategies.
- The strong investor appetite for European and global equities in May, as indicated by the €27bn inflows into European-domiciled UCITS ETFs, was driven by a strategic shift away from US strategies, improved investor sentiment, and the preference for diversified equity exposure.
- In addition to equity investments, there was also a noticeable preference for USD-denominated corporate and aggregate debt, which contributed to a balanced appetite for growth and income asset classes, underpinning the positive sentiment towards equities.
