European-domiciled ETFs saw varied performance in 2024, with equities outpacing bonds and active ESG-focused ETFs gaining traction.

The largest Europe-based exchange-traded funds (ETFs) showed a broad spectrum of performance in 2024 across equity, bond, and active categories. Equity markets outpaced bonds globally, with the Morningstar Global Markets Index gaining 18.90% over the year, and bond markets declining slightly at 0.11%. Among European-domiciled stock ETFs, the Invesco S&P 500 UCITS ETF emerged as the top performer, rising 27.15%, while the iShares Core MSCI EM IMI trailed with a 9.13% gain. Significant funds like the iShares Core S&P 500 and Vanguard S&P 500 ETFs posted annual growth rates of 26.92% and 26.91% respectively, aligning closely with their category averages. Similarly, global equity ETFs, such as the iShares Core MSCI World and the Vanguard FTSE All-World UCITS ETF, performed well, offering returns of 20.82% and 19.28% respectively. Bond ETFs underperformed compared to their equity counterparts. The best performer was the iShares J.P. Morgan $ EM Bond with a 7.88% return, while the iShares Core € Corp Bond lagged with a minor loss of 0.18%. On active ETFs, the JPMorgan US Research Enhanced Index Equity (ESG) UCITS ETF claimed the top spot, returning 26.71%, whereas the JPMorgan EUR Ultra-Short Income ETF suffered a decline of 0.79%. These results underline contrasting movements between active and passive ETF strategies, with actively managed funds focusing on ESG factors gaining momentum. The performance highlights differences in regional economies, with U.S. and global equities exhibiting robust recovery compared to Europe’s subdued growth in both stocks and bonds. A variety of strategies, from ultra-short-term Treasury bond funds to large-cap blend equity funds, catered to the risk and return preferences of investors in 2024. The data stresses the importance of diversification and the evolving prominence of ETF investment vehicles in financial markets. As these ETFs adapt to changing macroeconomic conditions, the landscape reflects both opportunities and challenges, reinforcing the need for tailored strategies to optimise investment outcomes.