Assets invested in European-domiciled exchange-traded funds fell 13% in March to €781 billion ($864 billion) from €899 billion in February, driven by €21.9 billion in net outflows, according to a report by Morningstar.
Equity and fixed-income ETFs in Europe, where institutional investors dominate the investor base, each suffered net outflows.
Assets invested in equity ETFs fell 16.5% from €559 billion in February to €467 billion in March. Largest drops were recorded by U.S. large-cap equity ETFs and emerging markets equity ETFs, which saw €5.4 billion and €3.6 billion of net outflows respectively, according to Morningstar's analysis, released Tuesday. Still, investors eagerly bought Europe large-cap equity ETFs, which saw net inflows of €2.4 billion.
Assets in bond ETFs dropped 10.6% to €219 billion in March from a record high €245 billion in February. Euro-denominated corporate bond ETFs saw net outflows of €2.7 billion in the month. The report said these outflows signaled investors' uncertainty about impending corporate-rating downgrades. Investors also sold emerging-market debt ETFs, which saw outflows of €4.6 billion. But eurozone government bond ETFs had net inflows of €1.8 billion.
"We haven't seen figures like these even in the darkest days of the global financial crisis of 2008 or during the height of the eurozone debt crisis," said Jose Garcia-Zarate, associate director, passive strategies at Morningstar, in an email accompanying the report.
"To put this in context, the previous net outflows high amounted to €8.3 billion, which was in August 2019 when weak economic indicators and a flare-up in the trade tensions between the U.S. and China sent jitters through global equity markets," Mr. Garcia-Zarate said. "This was then followed by a sharp rebound with net monthly inflows averaging €15 billion from September 2019 to January 2020."
