Key Takeaways
- For the first quarter since 2021, flows into active funds outpaced flows into passive funds in Q3.
- The rotation from US into European large-cap equity blend strategies continued, but at a slower rate.
- Macroeconomic uncertainty pulled flows into precious metal funds.
European funds continued to benefit from regional shifts away from the US, lower inflation and an uptick in primary bond issuance and IPOs. The cohort gathered EUR 165 billion in the third quarter of 2025, up from EUR 121 billion in the second quarter, the bulk of which went to active fixed income funds. Year-to-date flows for the European open-end and ETF market totaled an impressive EUR 452 billion through September.
Here are the 5 main trends of the third quarter.
1. Flows into active funds outpaced flows into passive funds for the first time since 2021.
With elevated uncertainty in global markets and politics, bond investors grew cautious and sought a more hands-on approach to investing, favoring active experience and skill over more rigid passive investing. Active fixed-income funds drew in EUR 107 billion this quarter, compared with a more modest EUR 12 billion into passive fixed-income funds.
Those investors with a higher risk tolerance continued to favor passive options for efficient and cost-effective access to equity markets. Passive equity funds gathered EUR 36 billion of inflows, while active equity funds suffered EUR 7 billion of outflows in the third quarter.
The quarter therefore stands out as being the first quarter since 2021 where flows into active funds, at EUR 107 billion outpaced flows into passive funds, at EUR 58 billion, thanks to a surge into active fixed-income funds.
2. A continued but slowing pivot from US to European equities
Funds in the Europe large-cap blend equity category attracted EUR 6.6 billion in the third quarter, slowing from EUR 10.7 billion in the second quarter and EUR 16.6 in the first quarter. Over the same period, US large-cap blend equity funds had EUR 6.5 billion in outflows. Even with investors taking their foot off the accelerator for Europe, it’s a notable change from the category’s large outflows from 2021 to 2024.
Equity funds overall brought in just EUR 30 billion in the third quarter though, the lowest quarterly figure since 2023, as investors shied away from risky assets.
3. Global flexible-bond funds benefited from the swing toward active fixed-income
Global flexible-bond funds captured investor attention again in the third quarter. USD-hedged global flexible bond funds gained EUR 16.1 billion in flows, and nonhedged global flexible-bond funds gained EUR 6.4 billion in flows.
This cohort returned to favor in 2024, after two years of outflows totaling nearly EUR 40 billion. Investors have since favored this dynamic and flexible approach to bond markets, given the challenging economic environment and whipsaws in geopolitical dynamics.
4. Uncertainty pushes investors towards gold
The volatile mix of macroeconomic uncertainty, geopolitical instability, and a weaker US dollar pushed investors into perceived safe-haven assets.
Commodities gained EUR 10 billion in flows over the third quarter. This was the biggest quarterly inflow in over three years, with EUR 8.9 billion of the capital going into precious metal funds.
The EUR 17 billion in flows for precious metals over the year to date is on its way to an annual record as well.
5. Thematic fund outflows persisted, though defence funds kept their momentum.
Thematic funds registered EUR 21 billion of outflows in the third quarter. The group has posted outflows for 10 straight consecutive quarters, shedding EUR 106 billion in assets over the last three years. Bucking that trend, security-themed funds saw EUR 1.3 billion of inflows in the third quarter, amid continued geopolitical tensions, bringing year-to-date inflows to EUR 8.2 billion. WisdomTree Europe Defence ETF led the way, with EUR 1.1 billion gathered in the third quarter.
Charlie Brasington contributed to this report.
