Introduction

2024 review and
portfolio ideas for 2025

For Professional Investors only.

Introduction

We are in an unconventional phase of the economic cycle, characterised by a positive outlook alongside anomalies like market concentration and excessive public debt levels.

Donald Trump’s return to the White House is another key element as his policy agenda could have deep implications for the global economy. This together with worsening geopolitical tensions highlights the need for greater diversification^[1] in portfolios.

Policymakers have however done a good job of curbing high inflation without slamming the brakes on growth. The global economic outlook is therefore benign, with a slowdown in US activity unlikely to turn into recession.

We believe there could be plenty of bright spots in the market. Therefore spotting the opportunities created by these macroeconomic trends and geopolitical shifts will be as important for ETF investors as trying to safeguard portfolios against some of the risks they entail.

In this investment landscape, here is how ETF implementation could
play a role in your asset allocation.

ETF Activity in 2024

With net inflows surpassing €254 billion (refer to flows chart at the end of this section), 2024 was a record year for the European UCITS ETF market.

The surge in asset gathering far exceeded the €152 billion recorded in 2023 (Source: ETFGI data, as of 31 December 2024) and elevated total ETF assets under management (AUM) to €2.1 trillion (see chart on the right).

This remarkable growth underscores the growing investor preference for ETFs as an efficient and cost-effective means of accessing a wide range of asset classes and market strategies within a single investment vehicle.

2024 review

European ETF asset growth

^{Source: ETFGI for data up to 31 December 2023 and Amundi for data from 1 January 2024 to 31 December 2024.}

Equity

In equities, investors again broadened their exposure across both Developed and Emerging Markets (EM), with US equities remaining a key focal point for investors, accounting for over half of total net inflows. Long-term investors continued to favour widely used building blocks, such as the MSCI World and MSCI All Country World indices. Additionally, sectors such as Information Technology garnered substantial interest, reflecting confidence in the tech industry’s growth prospects.

From a tactical standpoint, as equity markets became increasingly expensive, value-focused strategies gained traction, particularly in EM
and Europe, where investors targeted more attractive entry points.

Net inflows into equities reached €197 billion by year-end, up from €90 billion in 2023.

Fixed income

Fixed income ETFs also attracted significant inflows, totalling €58 billion at the year-end, close to 2023’s highs (€62 billion). Investors favoured government and high-yield bond ETFs, particularly those focused on the euro area, as they sought to capitalise on attractive yields amid a shifting interest rate environment.

USD debt was also in demand due to higher yields and a strong dollar.

Responsible investing

ESG investing remains a long-term trend, with ETFs aligned with Article 8 of SFDR*** maintaining steady demand throughout
the year.

A key development during 2024 was the increased investor focus on closely tracking their reference indices, particularly through Climate Transition Benchmark (CTB) approaches.

This shift represents an important evolution in the ESG and climate space, indicating a growing maturity among investors who are now balancing ESG integration with performance and relative risk, across all regions and asset segments.

Total ESG ETF AUM in Europe grew further, reaching €445 billion by year-end (+27% vs 2023), underscoring the sustained interest in responsible investment strategies.

2024 review

Gold

Gold ETCs experienced outflows in 2024, despite strong central bank demand for the precious metal which helped to support price levels.

European ETF cumulative flows in 2024 (M€)

Source: Amundi, European registered ETFs, as of 31 December 2024. ESG flows include equities and fixed income.
Past market trends are not a reliable indicator of future ones

2024 review

Portfolio ideas for 2025

Amid a softer and more fragmented outlook, we see bright spots that may offer compelling opportunities in 2025.

For a deeper dive into our convictions, read the latest investment outlook from the Amundi Institute.

Equities: Expand your focus beyond mega-caps in the US and explore opportunities in other developed markets (DM) like Japan and Europe. Leverage the resurgence of emerging markets (EM) in Asia and maintain global equities as a core portfolio component.

Fixed income: In general, falling inflation is supportive of government bonds such as US Treasuries and European bonds. They offer strong income generating potential whilst providing stability in times of market stress. In addition, investors may wish to prioritise investment grade credit in the US and Europe tilted towards low debt. Such businesses may be better positioned to withstand pressures from a moderating economic environment.

Thematics: Explore opportunities in artificial intelligence (AI) and semiconductors, given their pivotal role in driving innovation across industries.

Responsible investment: Favour frameworks such as the EU’s Climate Transition Benchmark (CTB), especially strategies with a low tracking error, to promote decarbonisation efforts without compromising on performance.

Commodities: Consider gold and broader commodities for portfolio stability amid heightened geopolitical tensions.