European Investors Shift Strategies in Response to US Trade Policy: Amundi Report
European financial backers continue to pour money into European ventures, owing to the impact of American trade policy. - European Financiers Persistently Inflow Funds in Europe Due to American Customs Regulations
In the European investment landscape, there's a noticeable shift in strategies with a focus on defensive investments and avoidance of volatile ones. Notably, the industrial sector witnessed a surge of 900 million euros in investments, while ETFs on IT companies expanded by 300 million euros. In contrast, the financial sector experienced outflows of 900 million euros.
According to Amundi, this trend is due to the strong correlation between financial companies and market movements. A flurry of activity has taken place in the ETF sphere, particularly in commodities. After a rise in gold prices, April saw the withdrawal of one billion euros from commodity ETFs, according to Amundi.
Background: Amundi's Insights on European Investment Trends
Current trends in European investment strategies, as observed by Amundi, reflect a significant shift influenced by global factors, including US trade policy and geopolitical tensions.
Defensive and Income-Oriented Investment Strategies
There's a clear preference for European equities over US equities, as reflected in the €8.5 billion inflow into European equities and withdrawals of roughly €2 billion from US equities in April 2025. Investors appear to be favoring defensive equity strategies, such as minimum volatility and smart beta income strategies, with income-focused investments attracting €1.2 billion and minimum volatility ETFs gaining €0.7 billion in April.
Enhancing European Competitiveness and Innovation
Investments aimed at boosting European competitiveness, defense spending, and innovation have gained Amundi's attention. Part of this focus stems from geopolitical instability, including US trade policies that encourage Europe to enhance its self-reliance and economic resilience. These factors contribute to higher expected returns in European equities, private equity, and infrastructure assets.
Inflation Uncertainty and Bonds
Bonds continue to serve as a stabilizing anchor in portfolios, even amid inflation uncertainties fueled by geopolitical tensions, supply chain disruptions, and global technological transformations. However, long-term interest rates may rise due to public debt concerns.
Positive Outlook for European Asset Classes
Despite trade-related headwinds from US policies and ongoing geopolitical risks, Amundi has revised upward its expectations for European asset classes, including equities, private equity, and infrastructure. This optimism reflects confidence in Europe's growth prospects.
Investor Caution
The shift towards European markets and defensive strategies illustrates investor caution amid uncertainties related to US trade policies and their ripple effects on global markets.
In conclusion, Amundi reports that European investors are increasingly adopting defensive, income-focused, and Europe-centric investment strategies in response to evolving US trade policies and broader geopolitical factors, anticipating a more robust European economic environment fostered by innovation, defense spending, and supply chain realignments.
- In the face of changing US trade policies and geopolitical uncertainties, European investors are shifting their strategies towards defensive investments, focusing on income-oriented approaches and European equities, as reported by Amundi.
- Not only are European investors cautiously investing in Europe, but they are also reallocating funds from the US, with $8.5 billion flowing into European equities and about $2 billion being withdrawn from US equities, as indicated by Amundi's insights.
