Investors bullish on European corporate bonds as many ditch inflationary concerns under Trump

Tariff threat poses risk for some bonds

European corporate bonds have seen a surge in popularity over the past few years, but that could change if US President Donald Trump’s tariffs lead to a rise in inflation.

According to data from Morningstar Direct, total assets under management for funds investing primarily in European investment grade, corporate-issued bonds, hit €262.8bn in December 2024, up from €227.2bn in December 2023. This was by far the largest increase in AUM in 12 months among the 16 categories of US and EU fixed income strategies listed by Morningstar Direct and seen by Investment Week. The European investment grade sector was followed by mandates which invest principally in government or explicitly government-backed agency securities denominated in or hedged into euro, with ...