Developed investment grade bond ETFs was the only asset class to see inflows north of €10bn last month, according to data from TrackInsight, after the Federal Reserve adopted a more dovish approach.
The asset class witnessed inflows of €12.6bn in January, building on the €19.4bn inflows seen the previous month.
Investors were more bullish about the outlook for the wider fixed income market after Fed chairman Jerome Powell indicated rate hikes would be put on hold due to slower growth in major markets and heightened political uncertainty after the Federal Open Market Committee (FOMC) meeting last month.
All fixed income asset classes posted positive flows with developed government bond ETFs seeing inflows of €4bn.
Developed high yield bond and emerging bond ETFs benefited from the increase in risk appetite, posting inflows of €2bn and €3.3bn, respectively.
Meanwhile, investors rotated out of a number of equity asset classes with US large cap ETFs seeing €23bn outflows while small cap ETFs were also in the red, posting negative flows of €1.9bn.
European Large Cap ETFs were impacted by the ongoing issues in Italy posting outflows of €1.2bn after the European Commission slashed the country's growth forecast to the lowest level in five years as it blamed the government's higher borrowing costs for slipping into a recession last year.
Emerging stock ETFs saw the most inflows across all equity asset classes with positive flows of €8.8bn, closely followed by global stock ETFs with €8.1bn inflows. Asian large cap ETFs also saw inflows of €24m.
TrackInsight's data covers both US and European-listed ETFs, which together comprise roughly 70% of the total market.