According to Morningstar data cited by FT Adviser, investors in European exchange-traded funds (ETFs) maintained exposure to artificial intelligence (AI) strategies in July despite market volatility.
Inflows and assets under management
- European ETF and exchange-traded commodity sectors attracted €47.3 billion of net new capital in July, up from €36.8 billion in June.
- Year-to-date net inflows over the first seven months totalled approximately €266 billion.
- Assets under management (AUM) in European ETFs were essentially flat in July at €3,220 billion, compared with €3,230 billion in June, as fresh inflows largely offset mark-to-market losses from weakness in US equity markets.
Sector preferences
A large share of investor capital continued to flow into US equity exposures. The global large-cap blend category drew the most new money (€10.1 billion), followed by the US large-cap blend category (€8.6 billion).
Jose Garcia-Zarate, a lead analyst at Morningstar, said investors viewed the July pullback as a buying opportunity and remained tilted toward growth-oriented exposures. There was no meaningful rotation into defensive or value strategies during the correction; inflows were clearly driven by AI- and technology-led, long-term growth narratives.
Bond ETFs and relative weight
Even though bond markets also experienced modest price declines, assets in bond ETFs rose from €546 billion in June to €548 billion in July, representing about 17% of total European ETF AUM. Within the fixed-income segment, government bonds and strategies linked to collateralised loan obligations (CLOs) attracted the largest inflows.
Performance of AI-themed ETFs
The AI sector has attracted investor attention with very strong one-year returns for some European ETFs. Morningstar lists the leading annual returns as follows:
- iShares AI Infrastructure UCITS ETF: +92.7%
- L&G Artificial Intelligence UCITS ETF: +66.4%
- Invesco Artificial Intelligence Enablers UCITS ETF: +63.4%
- WisdomTree Artificial Intelligence UCITS ETF: +58.3%
- iShares AI Innovation Active UCITS ETF: +53.1%
Why this matters
The combination of elevated returns in AI-focused funds and continued net inflows suggests investors retain strong conviction in AI and tech-driven long-term growth stories. At the same time, the near-term stagnation in total European ETF AUM and the sensitivity to US equity market moves underscore that performance and flows remain tied to market cycles and valuation shifts.
Disclaimer
This article does not constitute investment advice or a recommendation. An AI assistant contributed to preparing this piece; the final content was edited and verified by a journalist.
