Amundi ETF – The escalation of the conflict in the Middle East has reshaped investor preferences in the European ETF market, driving capital towards diversified equity exposures and bond funds with lower duration and credit risk.
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Article created by the editorial staff of ETFWorld.co.uk
Amundi ETF Market Flows Analysis with data as at 31 March 2026
ETFs, March 2026: investors seek refuge in global strategies and very short-term bonds
According to data published by Amundi for March 2026, the UCITS market’s total net new assets (NNA) saw a sharp slowdown compared with previous months. After two months of record inflows exceeding €45 billion, March stood at €9.4 billion.
Amundi’s report, dated 2 April 2026 and containing data as at 31 March, attributes the correction primarily to the global impact of the conflict between the United States, Israel and Iran. The war, which began with Operation ‘Epic Fury’ on 28 February 2026, led Iran to impose a partial blockade of the Strait of Hormuz, through which approximately 20% of the world’s oil consumption passes. During March, Brent crude oil prices exceeded $100 per barrel.
Against this backdrop of high uncertainty, investors favoured broad, global equity exposures rather than specific geographical or cyclical allocations. All-country world strategies attracted over half of total net inflows in the European UCITS market, signalling a clear preference for geographical diversification.
The strong dollar weighs on emerging markets
Geographically, outflows hit US equity indices (–€543 million) and developed markets in Asia (–€823 million). The latter was particularly exposed to the blockade of the Strait of Hormuz, which disrupted vital trade routes for the region.
Emerging markets (EM) recorded net inflows of just €29 million in March, a sharp drop from the €9.5 billion raised in February. The setback was mainly caused by the strengthening of the US dollar, which reduced the attractiveness of assets in developing countries.
Sector rotation: energy and defence on the rise, banking under pressure
At sector level, investors favoured sectors linked to the current macroeconomic and geopolitical environment. The energy sector attracted €1.9 billion, whilst the industrials sector drew in €1.4 billion.
In the thematic sector, defence recorded inflows of €885 million, a figure reflecting the policies of many countries aimed at strengthening national security and resilience at a time of heightened geopolitical risk.
Conversely, the financial sector suffered significant outflows of €3.4 billion. As the report highlights, this trend is consistent with a stagflationary environment, in which rising costs and weak consumer demand are squeezing banks’ profitability.
Fixed income: away from risky assets, towards liquidity and short-term instruments
In fixed income, investors adopted a defensive stance in response to uncertainty and a significant repricing of interest rate expectations. Central banks responded to the energy shock by pausing rate cuts or signalling rate hikes.
The Federal Reserve kept rates in the 3.50%–3.75% range at its 18–19 March meeting, halting the easing cycle that began in late 2025. The European Central Bank left the deposit rate unchanged at 2.00% for the sixth consecutive meeting. The Bank of England voted unanimously to keep the Bank Rate at 3.75%, explicitly citing “the conflict in the Middle East, which has caused a significant rise in global energy and other commodity prices”.
Against this backdrop, investors favoured short-duration strategies with low credit risk.
The main inflows went into cash alternatives, which attracted €2.5 billion. US and European government bonds also attracted €1.3 billion and €932 million respectively, with most of these flows concentrated on short-term exposures.
Ultra-short-term government bond funds added €1.7 billion, of which €1.2 billion went into very short-term US Treasury indices and €567 million into European government bonds of the same maturity.
Conversely, investors reduced their exposure to riskier areas of the bond market. Emerging market debt saw outflows of €1.3 billion, whilst high-yield corporate bonds recorded outflows of €2 billion.
ESG holds firm, particularly in bonds
A notable finding concerns the resilience of ESG (Environmental, Social, Governance) investments. In the investment-grade credit sector, which overall saw outflows, the investment-grade ESG segment, by contrast, recorded inflows of €606 million. According to Amundi’s report, this suggests that demand for ESG products is driven by structural investor preferences, not merely by short-term market dynamics.
Source: ETFWorld
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