UBS anticipates a seismic reallocation of global capital, forecasting that up to €1.2 trillion could move from the U.S. to European equity markets through 2029. According to its latest European ETF & Fund Flow Tracker, this projected shift would account for roughly 6-8% of European equity market capitalization.
Analysts at UBS highlight that international investors, who boosted their share of U.S. equities from 25% to 30% between 2018 and 2024, are now poised to reduce exposure, with ownership expected to slip back to 27% over the next five years.
While recent fund flows into European equities have been largely driven by retail participants, UBS suggests a more meaningful rotation will emerge as institutional investors rebalance portfolios—a process expected to gain momentum in 2026 and 2027 when strategic asset allocations are reviewed.
The Swiss investment bank stated that activity across European stocks cooled over the summer, with inflows into both large-cap and SMID-cap funds flattening after robust demand earlier in the year. U.K. equity funds, which faced outflows around mid-August, staged a modest rebound recently.
By contrast, U.S. equity fund inflows remain steady, with increased interest in passive large-cap value products during August. Meanwhile, inflows to emerging market debt funds have remained resilient, particularly within active strategies.
Despite these trends, UBS flagged that seasonal effects may be distorting flow data and urged caution in interpreting summer figures, stating that the next couple of weeks will be much more important.
