Amundi: European ETF investors turn to bonds as October volatility tempers risk appetite

Fixed income attracted almost a third of all new money into European ETFs in October, as investors shifted towards quality, income and diversification amid heightened market volatility, according to Amundi's latest monthly ETF flows report.

UCITS ETFs domiciled in Europe gathered €40.8 billion in net inflows over the month. Fixed income accounted for 33% of that total, well above the 15–20% share seen in previous months. Amundi describes the overall picture as a more cautious but still constructive market, with weaker performance in parts of the equity market and the ongoing debate over artificial intelligence (AI) investment in the US weighing on sentiment.

Fixed income rebounds on demand for quality

Bond ETFs took in €13.4 billion, a sharp increase from €8.3 billion in September. Amundi says this suggests investors are once again finding value in bond markets as a source of carry and portfolio stability.

Government bonds drew €5.5 billion, of which €3.4 billion went into US Treasuries. Investment grade credit was also in demand, with US and European exposures each gathering €2.2 billion.

Investors were careful about how much interest rate risk they took on. Within US Treasuries, inflows went mainly to intermediate maturities (€1.2 billion), which points to neutral or slightly long duration positioning rather than a strong bet on long-dated bonds. In US investment grade credit, the short end of the curve received €860 million. Amundi links this partly to heavy bond issuance from large technology and AI-related companies, much of it at longer maturities, which has made some investors wary of long-end duration.

Elsewhere, high yield inflows were broadly stable at €1.2 billion, and money market strategies gathered €1.1 billion. Amundi says this shows investors are not abandoning cash, but are more willing to move part of it into bonds for yield.

Equities: still positive, but rotating

Equity ETFs gathered €26.9 billion, but Amundi says the month was defined more by rotation than by broad risk-taking. Core diversified exposures led: global equities covering developed and emerging markets attracted €6.4 billion, and global developed market equities €6.1 billion. By region, US equities took in €4.9 billion and European equities €1.9 billion.

The main shift was between sectors. Technology still attracted €1.9 billion, though flows were more selective than in previous months. Defensive sectors also gained, with healthcare taking €722 million and utilities €135 million, while industrials and financials saw outflows.

In thematic strategies, interest in semiconductors and defence cooled after their strong gains over the past 12–18 months. Robotics led thematic inflows with €456 million, up from €275 million in September. Amundi suggests robotics may appeal as a more diversified way to access growth from automation and AI, with exposure to companies of different sizes compared with some of the more concentrated themes.

Factor flows were also defensive. Income-oriented strategies gathered €1.4 billion, equal-weight strategies €670 million and quality strategies €542 million. These flows fit a market in which investors are looking for resilience and risk management.

ESG flows hold firm

ESG ETFs took in about €7.7 billion, up from €6.7 billion the previous month. Most of the money went into broad global and developed market equity exposures and European investment grade credit.

Amundi notes that ESG flows still follow the same asset allocation trends seen across the wider market. Strong demand for government bonds, especially US Treasuries, does not always lead to inflows into ESG-labelled fixed income, because the investment universe there is smaller. ESG strategies therefore keep benefiting from demand for core equity and credit exposures, but they currently lack a thematic catalyst of their own.