European thematic UCITS ETF flows continue to surge upwards as investors gravitate towards high-conviction megatrends, with AI, defence, energy (specifically, uranium) and China Internet & Ecommerce all in leading positions, according to ARK Invest Europe.
Global Defence ETFs continue to lead the flows year-to-date (YTD) with +USD5.93 billion in net flows, with Europe Defence ETFs ranked second with +USD3.92 billion in net flows, the firm says.
“However, Artificial Intelligence ETFs have seen a remarkable surge in demand since the end of H1 2025, dominating inflows over August and September to reach almost +USD2.11billion in net flows YTD. This represents an increase of around 133 per cent in net flows since the end of H1 compared to Global Defence at +23 per cent and European defence at +29 per cent.”
Investor appetite for defence remains strong as geopolitical risks and modern warfare demands drive structural tailwinds for the sector. Defence contractors at the forefront of advanced aerospace, cybersecurity and drone technologies are capturing a growing share of global procurement budgets, the firm writes.
In Europe, allocations remain elevated as governments across the continent respond to new security realities with increased spending commitments. Investors appear focused on local champions with exposure to intelligence systems, defence electronics and strategic manufacturing.
The surge in demand for Artificial Intelligence ETFs shows that the pace of innovation in generative models and enterprise AI remains a key magnet for capital., the firm says.
Investors are favouring platforms with scalable AI infrastructure and exposure to real-world applications across software, semiconductors and robotics.
Elsewhere, Uranium ETFs ranked fourth with +USD594 million in net flows, while Cybersecurity ETFs ranked fifth with +USD388 million. Both themes continue to attract capital on the back of distinct but durable drivers: uranium from the renewed push toward nuclear power in the clean energy transition and cybersecurity from escalating digital threats and growing demand for resilient infrastructure.
Rahul Bhushan, Managing Director and Global Head of Investment Products at ARK Invest Europe says: “Investors are actively repositioning toward innovation-led, structurally driven themes in a shifting macro environment. With geopolitical risks, breakthroughs in generative models and AI-led innovation, investors are expressing high conviction views on megatrends rather than broad, undifferentiated exposures. It’s clear that thematic ETFs are no longer just tactical bets, they’re core strategic exposures.”
