UBS analysts forecast a major shift in global capital flows, predicting that €1.2 trillion could move from U.S. equities into European markets over the next five years.
In its latest European ETF & Fund Flow Tracker, UBS estimated that this rotation equals around 6% to 8% of Europe’s total equity market capitalization.
The bank expects international ownership of U.S. equities to decline from the current 30% to 27% by 2029, after rising steadily since 2018.
UBS noted that most recent fund flows mainly reflect retail investor activity, but the larger move will come later. The analysts expect institutional investors to increase allocations to European equities in 2026–2027, as strategic asset allocation reviews take time to execute.
The report also highlighted quieter summer activity across Europe. European Large- and SMID-Cap Equity Funds saw flat flows during the summer months, after strong inflows in the first half of 2025.
In the U.K., equity funds experienced heavy outflows in mid-August but have since recovered. Meanwhile, U.S. equity flows stayed modestly positive, with strong demand for large-cap value passive funds. Emerging market debt funds also attracted solid inflows, particularly in active strategies.
UBS warned against reading too much into seasonal summer trends, stressing that market flows in the coming weeks will provide a clearer picture.
