Europe's 2025 Investment Trends: ESG Outflows, Equity Inflows, and Higher Trading Volumes
European investment trends in the first eight months of 2025 reveal a mixed bag of inflows and outflows, with significant shifts in favour of certain sectors and strategies. Notably, investors pulled out from ESG-focused funds, while European equities overall saw robust inflows.
ESG-labelled equity funds experienced a collective US$16.8 billion in redemptions, with BlackRock's ACS climate transition fund bearing the brunt of the outflows at -US$14.7 billion (-86.9% of its end-2024 assets under management). However, the specific institution with the largest outflow from ESG-focused equity funds in Europe remains unclear.
Energy equity funds also faced a US$12.5 billion exodus, led by the energy select sector SPDR fund's US$7 billion loss (-20.9%). Conversely, European equities attracted a total of US$27 billion, with Vanguard's FTSE Europe ETF being the top recipient, gaining US$6 billion (36.1% of its end-2024 AUM).
Derivative-income funds continued to draw substantial investor flows, with JP Morgan's income funds leading the way. Meanwhile, healthcare focused vehicles saw US$17.9 billion in redemptions, with Vanguard's healthcare fund losing US$4.8 billion (-11.9% of its year-end 2024 AUM).
Clean-energy redemptions included BGF's sustainable energy fund (-US$0.8 billion, -19.2%), Pictet's clean energy transition (-US$0.6 billion, ≈16.3%), and Robeco's sustainable energy fund (-US$0.4 billion, 12.3%). Trading volumes in European equity increased by 29% year over year to €16.4 trillion by the end of September 2025.
The first eight months of 2025 saw a complex investment landscape in Europe. While European equities as a whole drew significant inflows, ESG funds and energy equity funds faced substantial outflows. Derivative-income funds and specific European equity funds, however, remained attractive to investors. The increase in trading volumes also signals a higher level of activity in the market.
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