The funds in favour and those investors are shying away from

European open-end funds and exchange-traded funds (ETFs) gathered €184.2 billion (£159.2 billion) in the first quarter of 2026, up from €154.3 billion in the fourth quarter of 2025. But the headline figure masks a quarter split sharply in two.

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January and February saw exceptionally strong inflows; while March reversed course, posting €18.7 billion of net outflows as the conflict in the Middle East escalated and investor sentiment weakened. 

The March pullback was not driven by panic redemptions — the data points to investors choosing to hold cash and wait, a meaningful distinction when assessing the quarter’s underlying tone.

Assets in European open-end funds and ETFs closed the quarter at just over €14.0 trillion, down from a February peak of €14.9 trillion and below the €14.4 trillion recorded at year-end 2025. Market losses, rather than redemptions, did most of the damage.

Investor caution on US funds

After a brief rotation back into US equities in the fourth quarter of 2025, European investors pulled back again in the first quarter of 2026, directing flows toward global and European large-cap blend strategies, which together attracted €58.6 billion.

Global equity funds are widely used by investors as a way to maintain a meaningful allocation to US markets while spreading geographical risk - a pragmatic positioning in a quarter when US equity valuations attracted renewed scepticism and AI-related spending drew increasingly critical scrutiny.

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Growth-style funds bore the brunt of those concerns, with global, US, and European growth strategies collectively shedding €23.3 billion. These categories carry significant exposure to technology and software companies, which came under pressure as investors grew wary of what they perceived as excessive AI infrastructure spending and the competitive threat that AI enhancements pose to established software businesses. It was the first quarter in over a year that Sector Equity Technology logged net outflows, at €5.3 billion.

Emerging market equities attracted €20.1 billion - nearly double the prior quarter’s figure - supported by US dollar weakness, improving fiscal positions in key markets, and the lagged effect of Federal Reserve rate cuts. The Middle East escalation in March triggered a sharp reversal driven by oil price fears and concerns over supply chain disruption.

Trends among fund firm flows

The flow league table in the first quarter of 2026 was dominated by providers with strong passive franchises. Passive funds gathered €120 billion in the first quarter, equivalent to 65% of total flows.

BlackRock drew €34 billion, by far the most of any manager, driven predominantly by its iShares ETF platform.

Elsewhere, Pimco, in fifth place attracting €13.1 billion, was the clear beneficiary of investors’ structural preference for active management in fixed income.

The PIMCO GIS Income Instl GBP H Acc fund was a standout beneficiary among active strategies, recording £4.15 billion in net inflows. The fund sits squarely at the intersection of what investors sought most in the first quarter: income generation and tactical flexibility. 

Led by Dan Ivascyn, PIMCO’s group chief investment officer since 2014 and the strategy’s manager since its 2007 inception, it draws on a broad toolkit spanning non-agency mortgage securities, global corporates, and emerging markets debt, adjusting positioning as conditions evolve. With rates still elevated and bond investors prioritising income over duration risk, the fund’s mandate places it well within the current environment.

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Where outflows concentrated, they fell largely on active equity managers, reflecting the broader investor retreat from actively managed equity strategies rather than any single firm’s misstep.

Active equity: Robeco bucks the trend

For active equity managers, the quarter proved challenging. With growth-style mandates - and the technology exposure they carry - decisively out of favour. Most of the damage fell on managers with significant exposure to US growth and technology names, where investor disillusionment ran deepest.

Robeco BP Global Premium Eqs IB GBP stood out as a notable exception, gathering £912 million to rank among the largest active equity fund inflows of the quarter. The strategy applies Boston Partners’ three-pillar methodology — systematically screening for attractive valuation, positive business momentum, and strong fundamental quality — across a concentrated portfolio of 70 to 135 global large-cap names.

Managed by Chris Hart since 2008 and supported by co-managers Josh Jones and Soyoun Song, the fund’s value-oriented positioning and structural underweight to the US equity market relative to its benchmark proved well-timed in the first quarter, shielding the portfolio from much of the drawdown in US indices and offering investors a counterweight to growth exposure at a moment when that trade was being unwound. 

In a quarter when the active equity category as a whole was shedding assets, Robeco’s disciplined process and consistent long-term track record gave investors a clear reason to allocate.

Giovanni Cafaro is analyst, manager research, at Morningstar.