Analysing Investor Sentiment Amid a Turbulent Year for Markets

2025 has been marked by market turbulence, with unpredictable tariffs, geopolitical tensions, and shifting interest rate expectations. As part of HANetf’s latest Thematic & Active Review, we surveyed wealth managers in the UK, Italy, and Germany to assess sentiment on key investment themes and the European ETF landscape.

Investor sentiment has been surprisingly resilient. An overwhelming 92% of respondents described their outlook for global markets over the next 12 months as optimistic (72% slightly, 20% very). Only 2% were slightly pessimistic, and 6% were neutral – a clear signal that confidence remains strong despite macro uncertainty.

Themes in focus

Technology and AI emerged as the most divisive themes: while 50% of respondents were bullish (including 38% “very bullish”), a significant 30% were “very bearish,” highlighting a sharp divergence in views. Digital economy and blockchain reflected similar polarisation.

In contrast, healthcare and income strategies garnered broad support, with 50% bullish sentiment and very few detractors.

Meanwhile, defence and cybersecurity were backed by 44%, though a sizeable 28% were neutral, pointing to cautious optimism. Decarbonisation and ESG themes drew limited conviction, with nearly half of respondents remaining neutral. Emerging markets and mining/materials also saw muted confidence, likely due to continued geopolitical and macroeconomic headwinds.

Among commodity-focused themes, uranium stood out, with 66% bullish (12% very bullish). This conviction is likely driven by rising global demand for nuclear energy, fuelled by U.S. policy (including President Trump’s target to quadruple nuclear capacity by 2050) and a new EU focus on energy security.

The ETF market – allocation and growth trends

ETFs remain a foundational component of wealth managers’ portfolios. The vast majority (80%) allocate 11–25% of their clients’ portfolios to ETFs, while 14% allocate 26–50%. Only 4% reported ETF allocations below 10%, reflecting the widespread adoption of ETFs across markets. That said, just 2% allocate over 50% to ETFs, suggesting potential growth ahead as more investors begin to see ETFs as the default fund wrapper.

Looking ahead, the European ETF market is expected to continue expanding. When asked which ETF category would experience the most growth over the next five years, thematic ETFs were the top choice (38%), followed closely by active ETFs (36%).

This shows that despite current caution, investors expect innovation and targeted exposure to remain key drivers of growth.

Spotlight on active ETFs

While active ETFs currently represent a relatively small share of investor portfolios in Europe, they are clearly gaining momentum.

78% of respondents allocate just 1–10% of their ETF holdings to active strategies, while 22% allocate 11–25%. However, this is poised to change: 96% of wealth managers plan to increase their allocation to actively managed ETFs in the next 12 months:

• 64% plan to do so moderately
• 32% expect a significant increase
• Only 4% said they do not plan to increase exposure

The top areas where respondents said Europe needs more active ETFs were covered call/income and fixed income (both at 34%). Other underserved areas include absolute return (14%) and thematics (8%).

These gaps align with future investment intentions. Absolute return was the most popular category among those considering future investment in active ETFs (78%), followed by covered call/income (60%), fixed income (50%), thematics (44%), and ESG and equities (both 32%).

Moreover, as active ETFs rise in importance, so too does the choice of provider. The most important selection criteria cited by investors were:

• Reputation and brand strength (74%)
• Strategy innovation (62%)
• Sales, communication and support (56%)
• Manager expertise and track record (48%)

Cost (30%), performance history (22%), and platform availability (8%) were secondary considerations – indicating that investors value innovation and brand strength over simply cost and performance.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.