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From 2025 to 2026. What’s Next?

Spotlight January 2026

Banner ETF Investment Insights

Welcome to the new year’s edition of Xtrackers Spotlight!

Each month, we shine a light on the trends shaping ETF investing for institutional clients.
This month, we take stock of last year’s UCITS ETF market trends and insights and focus on our outlook and investment ideas heading into 2026.

Looking back: Where did the UCITS ETP flows go in 2025?

The biggest flow winners & losers of 2025

Top/bottom 10 categories in terms of net new assets (NNA)

Source: ETFBook.com and Xtrackers calculations. As per end of December 2025. Please note that flow numbers on this slide are based on an internal Xtrackers ETF database using ETFBook data, in which ETFs are allocated by Xtrackers to a classification based on the underlying exposure. There may be deviations compared to other sources. DM = Developed Markets. EM = Emerging Markets. AC = All Country (incl. Developed & Emerging Markets).

 

ETFs saw another record year in 2025, with over €320bn inflows – well above 2024’s €250bn – underscoring the structural growth of ETFs as one of the investors’ preferred vehicle:[1]

  • Equities dominated with ~€235bn (roughly 73% of flows), led by broad exposures such as Global, U.S., and Europe.
  • Early in the year, diversification into Europe, EM, and global exposures increased – especially during April’s volatility – before the U.S. regained leadership again later in the year.
  • Technology continued to attract assets (~€13bn), while thematic ETFs – notably defence (~€10bn) – benefited from geopolitical tensions.
  • Fixed income captured around 20% of flows, led by Euro corporate bonds, U.S. Treasuries, and Euro cash-like exposures.
  • Commodities saw ~€10bn of inflows, with gold drawing €6bn amid de dollarization trends.
  • Active ETFs continued their strong rise, attracting €24bn (with €16bn in Active Equity and €7bn in Active Fixed Income). Active ETF AuM has grown ~40% annually over the past five years[2] and they are expected to further gain relevance.
  • The main laggards were ESG strategies (due to geopolitical focus and regulatory uncertainty) and U.S. small caps.

The Top 15 ETF Performers in 2025

Xtrackers ETFs and ETCs by 2025 performance (in EUR)

#Name2025 Performance (in EUR %)
1Xtrackers IE Physical Silver EUR Hedged ETC Securities119.79
2Xtrackers IE Physical Silver ETC Securities102.43
3Xtrackers IE Physical Platinum EUR Hedged ETC Securities101.66
4Xtrackers IE Physical Platinum ETC Securities84.14
5Xtrackers IE Physical Gold EUR Hedged ETC Securities61.02
6Xtrackers MSCI Korea UCITS ETF 1C60.06
7Xtrackers IE Physical Gold GBP Hedged ETC Securities54.93
8Xtrackers Spain UCITS ETF 1D54.29
9Xtrackers ATX UCITS ETF 1C47.38
10Xtrackers IE Physical Gold ETC Securities43.28
11Xtrackers Vietnam Swap UCITS ETF 1C38.11
12Xtrackers MSCI Europe Financials Screened UCITS ETF 1C35.45
13Xtrackers MSCI Africa Top 50 Swap UCITS ETF 1C35.22
14Xtrackers FTSE MIB UCITS ETF 1D35.16
15Xtrackers LevDAX Daily Swap UCITS ETF 1C34.91
...  
158Xtrackers MSCI World UCITS ETF 1D4.96
235Xtrackers S&P 500 Swap UCITS ETF 1D1.82

Source: DWS Investment GmbH, Bloomberg LP. As of: 18 December 2025. Past performance is not a reliable indicator of future returns.

­

Despite dominating flows, global and U.S. equities lagged other regions in performance – particularly for EUR based investors. Precious metals ETCs led the rankings, while Europe (namely Spain, Austria, Italy) and several EM countries (such as Korea, Vietnam, Africa) delivered strong performance. These trends may carry into 2026, reinforcing the case for increased EM allocation and Europe as a tactical diversifier (more below).

Global ETF Outlook 2026 & beyond: The growth story continues

 

There are three key factors which continue to strongly drive ETF adoption:

Re­tail in­ves­tors are po­we­ring ETF growth

Global ETF assets reached €19tn[3] in 2025 and may climb to €25tn by 2030[4], supported by rising retail adoption. Europe remains underpenetrated vs. the U.S., with ETF savings plans expected to grow at a 30%+ CAGR[5].

Di­gi­tal plat­forms are trans­for­ming ETF dis­tri­bu­tion

Digital channels are expected to dominate ETF distribution. In Europe alone, digital platforms may exceed €650bn by 2028[6], reshaping investor access.

Pro­duct in­no­va­tion and Ac­tive ETF mo­men­tum are dri­ving de­mand

Active ETFs have surpassed €1.8tn in AuM[3] and continue to grow strongly. Innovations—such as single-stock ETFs, buffer ETFs, and digital asset ETPs— are further expanding investors’ toolkit[4].

Outlook: Investment Ideas for 2026

The Macro Backdrop

2026 is expected to be a favourable year for risk assets[7]. The main themes being:

  1. Policy easing as inflation moderates in major DM countries[8].
  2. Growth re-acceleration in H2 following a softer first half[9].
  3. The AI-driven investment cycle continuing to fuel capex and productivity[7].
  4. Geopolitics and deglobalization sustaining structural de-dollarization and boosting defence and infrastructure spending and supply-chain reshoring[10].
  5. Fiscal dominance and public debt overhang shaping yield curves and policy risks[8].

A core-satellite portfolio approach: keep U.S. & AI core, but diversify deliberately

U.S. and AI exposures remain essential given superior earnings prospects. But adding regional breadth, small caps, and selective thematics and sectors may reduce concentration risk and capture a potential broadening of the market rally[7].

The Portfolio View

Note: for illustrative purposes only. This information is intended for informational purposes only and does not constitute investment advice, a recommendation, an offer or solicitation. Source: DWS Investment GmbH, December 2025.

The top 3 implementation ideas

Add EM for growth and di­ver­si­fi­ca­tion (equi­ty & lo­cal debt)

  • Equity: EM offer attractive valuations vs. developed markets[11] as well as potential tailwinds from a weaker USD and rising commodity prices. We believe EM Asia with strong growth in tech (i.e., China tech and Asian semiconductors)[7] and reduced tariff uncertainty as well as Latam due to policy reforms and expected monetary easing could continue to perform strongly[12].
  • Fixed Income: EM local-currency debt offers higher real yields and currency appreciation potential. Policy flexibility in many EM countries adds resilience[8] [12].
  • Portfolio Role: Diversifies U.S. concentration; adds currency and growth exposure.

Eu­rope’s co­me­back po­ten­tial: Va­lue meets op­por­tu­ni­ty

  • Why? Growth lags, but cheap and unloved European cyclicals could play catch‑up as infrastructure & defence spending start being deployed in 2026. The more cyclical sectors (i.e. financials, industrials), countries (i.e. Germany, Spain, Italy, Austria), and key beneficiaries from the fiscal programs (defence/ infrastructure/ green transition) have rebound potential[8].
  • Portfolio Role: Can be employed as inexpensive, tactical diversifier.

Small Caps: Un­lo­cking Mar­ket Breadth

  • Why? Small caps have historically outperformed post-rate cuts and benefit from easing conditions and domestic demand[13]. A catalyst could be a market broadening beyond mega-cap tech as monetary policy loosens, and growth re-accelerates.
  • Portfolio Role: Enhances size diversification and captures cyclical upside.

In Summary

UCITS ETF inflows hit another record in 2025. As we enter 2026, a supportive macro environment—policy easing, improving growth, and ongoing AI capex—may continue to favour risk assets. The core remains U.S. and AI, but meaningful opportunity lies in broadening portfolio exposures: Emerging Markets for growth and currency diversification, Europe as a value rebound play, and small caps for cyclical upside, complemented by themes such as defence and infrastructure.

Risks to the view:


Systemic shocks – such as recessionary pressures or geopolitical dislocations – trigger broad risk-off sentiment, with equities typically bearing the brunt. Defensive sectors may underperform if inflation reaccelerates or central banks turn more hawkish. Market leadership can rotate quickly, especially if investor sentiment shifts toward cyclical or speculative growth.

Key Risks:


An investment in an Xtrackers ETF may not be suitable for all investors. Xtrackers UCITS ETFs are not capital protected, therefore investors should be prepared and able to sustain losses up to the total loss of the capital invested.

Investors should be aware that DWS Investments UK Limited, any of its parents or any of its or its parents subsidiaries or affiliates may from time to time own interests in the funds which may represent a significant amount or proportion of the overall investor holdings in the Fund. Investors should consider what possible impact such holdings, or any disposal thereof, may have on them.

Substantial fluctuations of the value of the investment are possible even over short periods of time.

Investments in Xtrackers UCITS ETFs involve numerous risks including but not limited to general market risks relating to the relevant underlying index, credit risks on the provider of index swaps utilised in the Xtrackers UCITS ETFs, possible delays in repayment, market fluctuations, counterparty risk, foreign exchange rate risks, interest rate risks, inflationary risks, liquidity risks, loss of income and principal invested and legal and regulatory risks.

Movements in exchange rates can impact the value of your investment. If the currency of your country of residence is different from the currency in which the underlying investments of the fund are made, the value of your investment may increase or decrease subject to movements in exchange rates.

Shares in Xtrackers UCITS ETFs which are purchased on the secondary market cannot usually be sold directly back to the fund. Investors must purchase and redeem such shares on the secondary market with the assistance of an intermediary (e.g. a market maker or a stock broker) and may incur fees for doing so (as further described in the prospectus). In addition, investors may pay more than the current net asset value of a share in a Xtrackers UCITS ETF when buying shares on the secondary market and may receive less than the current net asset value when selling such shares on the secondary market.

The value of an investment in Xtrackers ETFs may go down as well as up. Past performance does not predict future returns.

For further information regarding risk factors, please refer to the risk factors section of the relevant prospectus and the Key Investor Information Document.