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September was a rate shock. Surging energy prices revived inflation concerns and central banks on both sides of the Atlantic raised rates, pushing sovereign yields to multi-year highs.
Flows cooled but held positive, easing to $42.6bn from August’s $57bn, while assets slipped 1.4% on the month to $3.92tn, still up 20.7% year-to-date. Equity bore most of the slowdown, with flows down to $29.9bn from $41.1bn, though market beta still took about 69% of equity inflows. Trading rebounded 18% to $448bn, led by RFQ, but stayed below the January–August average of $513bn. A further 69 products listed, taking the year-to-date count to 454.
The rotation was defensive, even where performance lagged
Beneath a largely flat equity market, investors rotated towards sectors seen as more resilient when yields rise. The telling feature was that money went into defensive and inflationresilient exposures even where recent performance was weak or negative: Precious Metals, Health Care and Floating Rate ETPs all drew inflows despite soft returns. Precious metals led commodity flows at $3.7bn.
On the other side, rate-sensitive sectors saw a broad exit, led by Utilities, and the size-factor complex was hit, as smaller and more leveraged companies carry more exposure to rising borrowing costs. Financials also turned negative, with $1.3bn of outflows.
Semiconductors and AI were the exception
Not every growth theme was sold. Semiconductors and AI-focused ETPs were among the few to pair inflows with positive performance, and Disruptive Tech, including Cybersecurity, bucked the equity slowdown with $1.1bn of inflows. Cybersecurity drew particular attention as the security risks of advanced AI moved up the agenda. Fixed income flows picked up to $9.2bn, led by government bonds at $4.1bn, while high yield saw $0.5bn of outflows, in keeping with the move towards safer, higher-quality exposure.
What it signals
September reads as a preview of how ETP flows might behave in a sustained higher-rate environment. The willingness to buy defensive and inflation-resilient exposures even as they underperformed points to positioning for the regime rather than chasing recent returns.
If rates stay high, the pattern suggests defensives and low-inflation-sensitivity exposures keep attracting flows, while rate-sensitive sectors face further pressure. For anyone allocating or building product, the read-through is which exposures hold demand when the discount rate moves against them.
The figures here are drawn from ETFBOOK’s European ETP flow, AUM and trading data, which tracks daily net flows and volumes across the European ETP universe, segmented by asset class, sector and segment.
The full September 2026 European ETP Market Landscape, prepared by Davide Guberti, Head of Data Analytics, includes a decomposition of the month’s flow and performance contributions by segment.
