According to financial analyst Chaslau Koniukh, 2025 has become a turning point for the global exchange-traded funds (ETF) industry. Despite geopolitical challenges , rising inflation risks and general volatility in financial markets , the volume of capital directed to ETFs has reached record levels . This demonstrates the growing confidence of investors in instruments that provide flexibility, transparency and accessibility in portfolio management.
Retail investors have played a key role in this process, becoming increasingly active use ETFs not only as a means of diversification, but also as a mechanism for protecting against macroeconomic risks. Their “buy the dip” strategy and interest in stock instruments in different regions show a new phase in the development of the market, where the dominance of institutional players is no longer absolute. Koniukh emphasizes that this trend is forming a new balance of power in the global financial ecosystem.
Europe: Shifting focus from bonds to stocks
In July, European investors directed more than € 7.3 billion into global large-cap stocks, while the outflow from government bonds reached € 1.4 billion. This demonstrates a significant change in risk appetite. According to Koniukh, the interest in equities indicates a move away from traditional “safe havens” in favour of more dynamic asset classes, which could have long-term implications for the composition of Europeans’ portfolios.
This trend is especially noticeable against the backdrop of geopolitical and economic instability, when classic instruments of protection, such as government bonds, are no longer the only priority. Investors are increasingly choosing shares of global corporations and technology companies, which are capable of providing not only capital growth, but also stability during periods of turbulence. Koniukh notes that such investor behavior may indicate a gradual shift in the market structure in favor of stock instruments.
At the same time, this transition is not without risks. Excessive concentration on equities creates vulnerability to corrections and increases the sensitivity of portfolios to external shocks. From the perspective of regulators, such dynamics may require additional attention to the stability of capital markets. As Koniukh notes, the future of European ETFs will depend on the ability to combine the growing interest in equities with maintaining a balanced approach to risk management .
US: New Records and the Role of Retail Investors
ETF Industry reached a record $ 11.8 trillion in assets under management. In July alone, net inflows totaled $ 124.1 billion, and year-to-date, they’ve totaled more than $ 678 billion.
The special feature of this year was the exceptional influence of retail investors. Vanguard ETFs, which they traditionally choose, accounted for 37% of net flows in the U.S. As Koniukh notes, this dynamic demonstrates the growing financial literacy and confidence of “small players” in using exchange-traded funds even in the face of political risk and instability .
At the same time, the growing role of retail investors creates new challenges for the market . On the one hand , their activity supports liquidity and contributes to record volumes of borrowings . On the other hand , the risk of “herd behavior” increases , when mass actions of small investors can exacerbate volatility and accelerate both the growth and decline of the market . Koniukh emphasizes that this trend requires careful monitoring by regulators and professional market participants .
Active and Gold ETFs: A Resurgence of Interest
Despite the dominance of passive strategies, active ETFs have also shown unprecedented results . In July, they raised more than $ 42 billion, the second-best monthly performance in history. This underscores the desire of investors to seek out outsized returns in a difficult market environment.
In parallel, there has been a strong resurgence of interest in gold ETFs, with global inflows this year exceeding $ 44 billion, nearly reached 2020 record highs. Gold remains an “insurance policy” for investors hedging against inflation and geopolitical tensions, Koniukh said.
At the same time, experts note that the simultaneous growth of interest in active and gold ETFs is a sign of increased caution among investors. They are ready to take risks for the sake of potentially higher income, but at the same time they are strengthening their defensive positions. Koniukh emphasizes that it is precisely this dual strategy that could become decisive for the market’s behavior in the coming quarters, because it reflects the balance between the search for profit and the need for stability.
European market under pressure from American giants
Asset Management Sector in Europe is undergoing a transformation: BlackRock and Vanguard have doubled their European assets to $ 4.9 trillion in the last decade. This is forcing local players such as DWS, Amundi and UBS to seek consolidation and innovation. Koniukh notes that “American companies are changing the rules of the game in Europe due to their scale and cheap funds.”
The growing popularity of passive strategies, coupled with the availability of products from global giants, is creating competitive pressure on European companies, which are forced to expand their product lines and more actively enter niche segments, in particular ESG and thematic ETFs. Koniukh emphasizes that local players risk losing market share if they do not adapt to the new realities, where not only reputation is valued, but also scale and cost efficiency.
At the same time, European companies retain a strong position thanks to their knowledge of local markets and close ties with regulators and institutional clients. This allows them to develop products that are better adapted to the specifics of the continent. According to Koniukh, further development of the market will depend on whether European players can find a balance between cooperation and competition with American corporations, creating new partnership formats and more flexible investment solutions.
ETF investment volumes in 2025 underscore their strategic importance to retail investors worldwide. At the same time, the industry faces challenges ranging from geopolitics to the risk of over-concentration in the stocks of major companies.
Chaslau Koniukh concludes, today’s surge in interest in ETFs is not only the result of short-term market trends, but also a sign of profound changes in investment culture, where retail participants play a key role.
At the same time, Koniukh notes that despite record inflows, the future of ETFs will depend on the market’s ability to find a balance between rapid growth and risk management. Investors are increasingly combining active and passive strategies, adding defensive instruments like gold and gradually forming a new paradigm: more cautious, but also more flexible. It is this transformation that will determine the market’s resilience in the coming years.
Disclaimer: This article contains sponsored marketing content. It is intended for promotional purposes and should not be considered as an endorsement or recommendation by our website. Readers are encouraged to conduct their own research and exercise their own judgment before making any decisions based on the information provided in this article.
