The global ETF market attracted nearly half a trillion euros (€495bn) in 2019, with equities taking more than half of the global inflows (€251bn) and fixed income close behind with €229bn, according to data from Amundi Asset Management.
Europe saw another record-breaking year with €104bn of net new assets, the majority of which was taken by fixed income (€55bn), while the traditional outperformer, equity ETFs, enticed €48bn.
In the US, however, it was equity (€165bn) that bested fixed income (€155bn).
December proved a particularly strong month for the ETF market, with its €82bn representing one-sixth of total global inflows for 2019.
Despite Brexit, a resignation by a prime minister and a winter election, the UK drew the greatest equity ETF inflows, seeing €7.4bn enter the market, with second-place China way behind at €713m.
German and French equities suffered the greatest outflows by country, losing €4.5bn and €2.6bn respectively, followed by Spain (-€692m), Sweden (-€274m) and Italy (-€270m), which means the top five greatest outflows are all taken by European nations.
Conversely to Europe's poor performance in the equity ETF space, it topped the rankings for corporate fixed income ETFs, with Corporate Eurozone (€13bn) receiving more than three times as much as Corporate USA (€4bn).
Emerging markets took the largest share of government debt, with inflows of €7.8bn, closely followed by USA Short Term at €4.9bn and USA Mid with €3.5bn over 2019.
Gold saw a boost at the end of the year, gathering €125m to take its year end figure to €695m, pushing it to the top of the commodities ETF inflows.
As of 31 December 2019, there were 7,822 individual ETFs with 2,418 in Europe, 3,626 in US and 1,778 in Asia.
'Bumper year' for ETF industry
Jose Garcia Zarate, associate director of passive strategies research at Morningstar Europe, said 2019 had been another "bumper year" for the ETF industry, "particularly so in Europe where we have beaten a number of records".
He said: "European ETFs attracted record-breaking flows in calendar year 2019, beating the previous high of €98.5bn in 2019. This outstanding result was achieved on the back of a massive surge of flows in the fourth quarter totalling €45.2bn, which was also a new quarterly high for Europe.
"The ETF industry now boasts a string of 15 years of uninterrupted growth in flows and assets across the globe, and the outlook remains positive as the shift towards low-cost passive investing continues apace.
"The one equity market that remained unfavoured throughout was the eurozone, both at broad region and single country level, with noticeable flows out of German and French equities.
"In the case of Germany, investors are paring back positions on concerns about a slowdown in the economy."
Garcia Zarate added: "The same can be said of France, although with the added element of political risk, as the country has been engulfed in a string of social protests for some time now."
Chris Gannatti, head of research, Europe, at WisdomTree, added: "This was a strong year for ETF flows, but we would note that it was also a very strong year for performance across many different asset classes.
"US equities were up more than 30% as seen through the S&P 500 index. Most European country equity indices (as shown through respective MSCI index benchmarks) were up between 20% and 40%. Even emerging markets were quite strong."
Gannatti added: "There is little question that investors are trying to do what they can to mitigate the fact that many of the more classic government debt and short-term liquid fixed income instruments have negative yields. Emerging market debt has been very popular, and the performance has been very strong.
"Investors seem to be struggling to see the growth potential in Europe. Germany is being hit by the focus on trade in a negative way as well as 'de-globalisation' in the political sphere. With the slower growth prospects, many investors have trouble seeing much in the way of return potential in European financials."
Gary Buxton, head of ETF EMEA at Invesco, commented that "[it is] encouraging from an industry standpoint that 2019 was the year of fixed income".
He said: "With around half of the year's flows going into fixed income ETFs, it is clear that investors are beginning to see the benefits of the ETF structure for fixed income strategies, both in terms of low-cost core holdings and more innovative ways to enhance their income.
"The European market is almost 20 years old, [but] the ETF industry, in many ways, is just getting started."