European large-cap ETFs was the only equity asset class to record outflows in 2018 as ongoing concerns around the Brexit negotiations and the Italian budget spooked investors.
According to data from TrackInsight, European large caps were one of only two asset classes to record outflows last year with €4.2bn withdrawn from the market.
The performance of European equities has not helped investor sentiment with the Euro Stoxx 50 falling 11.1% over the year, while the Stoxx Europe 600 was down 9.2%.
Furthermore, macro issues such as Italy's refusal to make changes to its budget until the end of the year has also caused jitters.
On 12 December, EU commission vice-president Valdis Dombrovskis said Rome had agreed to have a budget deficit next year of 2.04% of GDP, rather than the 2.4% forecasted under Italy's original plans, spelling an end to the long-running feud between Brussels and the Italian government over the budget.
The only other asset class to see outflows was developed high yield bond ETFs, as investors expressed concern about liquidity issues on the back of central banks withdrawal from the market. It saw outflows of €9.3bn, the highest volume of outflows this year.
There were positive flows across the rest of fixed income, with developed investment grade bonds and developed government bond ETFs posting inflows of €79.4bn and €65bn, respectively.
Emerging bond ETFs saw minor positive flows of €4.6bn, while across the EM equity space, emerging stock ETFs witnessed inflows of €35.4bn, despite the well-documented problems in Turkey and Argentina, and Asian large-cap ETFs were in the black with €340m inflows.
US large-cap ETFs saw the largest inflows across all asset classes with €92.1bn as investors continued to take advantage of the boost from US President Donald Trump's Tax Cuts and Jobs Act reform in 2017.
Meanwhile, small-cap ETFs saw inflows of €22bn and global stock ETFs saw the second highest inflows with €69.3bn.
TrackInsight's data covers both US and European-listed ETFs that in combination make up around 70% of the total market.