Fidelity’s ETF market update: Strong demand from European ETF investors continued at the start of the year, driving the ETF market to an all‑time high in net inflows.
Neil Davies Head of ETF Product and Capital Markets, Europe and APAC at Fidelity International
- European ETF market records all-time high inflows
- Markets start the year in risk-on mode
- Rotation out of the US into other regions continues
Equity and bond ETFs* saw inflows 88% and 78% above their respective 12‑month averages.
“While we continue to move from one geopolitical crisis to the next, the ETF market remains a source of stable growth,” says Neil Davies, Head of ETF Product and Capital Markets, Europe and APAC at Fidelity International. “Financial markets price in the future and question whether companies will be able to make money in three, five, or ten years. Despite short-term volatility, markets still seem confident on the long-term trajectory, hence the rising prices”, Davies says. ETFs benefit from this overall sentiment, in addition to ETF‑specific drivers such as transparency and availability. “Putting all these factors together, I see no indications that the positive trend for ETFs will change in the short term.”
Europe-focused ETFs stood out in January, recording stronger inflows in both equities and bonds compared to US ETFs. “The rotation from the US into other global regions is far from over. European ETFs experienced their second‑strongest month since records began,” says Davies. Investors continue to diversify their portfolios and reduce their US exposure. Nevertheless, US-focused ETFs were able to halt their downward trend. Over a three‑month view, they increased by 86%. “Growth in US ETFs has been comparatively weak in recent months, so we are now seeing short-term catch-up effects. However, I do not yet see a general trend reversal,” Davies adds.
Net inflows/outflows UCITS ETF (US$mil)
| January 2026 | 3 months average | Increase/ decrease | 12 months average | Increase/ decrease | |
| Total flows | 56255 | 34123 | 65% | 32043 | 76% |
| Equities | 43818 | 23598 | 86% | 23291 | 88% |
| 5503 | 2952 | 86% | 3485 | 58% |
| 9940 | 4708 | 111% | 6076 | 64% |
| Fixed Income | 13093 | 11027 | 19% | 7371 | 78% |
| 2564 | 2454 | 4% | 1635 | 57% |
| 4327 | 5465 | -21% | 4189 | 3% |
All data taken from etfbook.com as of 31st January 2026
Market event of the month: Emerging markets ETFs hit all-time high
January saw record inflows into equity ETFs focused on emerging markets. With USD 6.4 billion of inflows, more new money flowed into this region at the beginning of the year than into US ETFs. “Alongside the diversification argument, the weakening US dollar is helping emerging markets,” says Davies. In 2025, eight of the ten strongest equity markets were emerging markets**. “The catch-up potential of this region is significant. It would not surprise me if we continue to see further inflows here in the future”, Davies concludes.
Source: ETFWorld
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