European thematic ETFs are attracting money again after two difficult years, with semiconductor funds overtaking defence strategies as investors increasingly target the infrastructure required to support artificial intelligence.
Thematic ETFs attracted $13.31bn of net inflows in Europe during the first half of 2026, according to ETFbook data included in HANetf’s latest review of the European market. That is already equivalent to almost 80% of the $16.66bn gathered during the whole of 2025. The recovery follows net outflows in both 2023 and 2024.
Defence has been one of the strongest areas of thematic demand in recent years, helped by rising military budgets and changes in European security policy. However, the latest figures indicate that investors are beginning to look elsewhere.
European semiconductor ETFs attracted $3.19bn during the second quarter and have now overtaken defence ETFs for year-to-date flows. The figures suggest that demand linked to artificial intelligence is becoming more focused on the physical infrastructure behind the technology, including chips, memory, data centres and power systems, rather than broad exposure to software or large technology companies.
Europe’s memory-chip ETF market remains much smaller than its US counterpart, with $62.46m in assets across products that were launched during June, namely Defiance Memory UCITS ETF and the renamed Amundi Global Memory Chips UCITS ETF.
Other specialist areas are also attracting interest. Space ETFs gathered more than $1bn during the quarter, while product launches targeting photonics, power infrastructure and other parts of the AI supply chain point to a broader shift towards narrower and more targeted thematic exposures.
The return of inflows does not necessarily mark a return to the thematic ETF boom seen around 2020 and 2021. However, it suggests that investors remain willing to use thematic products where there is a clear structural growth story – particularly when that story is supported by visible capital expenditure and demand for physical infrastructure.
Our view
David Batchelor, senior analyst at QuotedData, said: “The recovery in thematic ETF flows is notable, but the change in where investors are putting their money is arguably more interesting. Defence remains an important theme, but semiconductor funds moving ahead suggests that attention is increasingly turning towards the infrastructure needed to build and operate AI systems.
This may be a sign that the AI investment story is becoming more mature, with investors looking beyond the most obvious software and mega-cap technology names towards memory, data transmission, power and other potential bottlenecks.
However, the growing number of highly specialised ETFs also demands some caution. Narrower products can provide more precise exposure, but they can also bring greater concentration, valuation and timing risks. Investors should therefore look closely at the holdings and index methodology – particularly where several apparently different AI infrastructure ETFs may ultimately own many of the same companies. This is a topic we covered in the latest episode of ETF Intelligence by QuotedData”.
