Morningstar: active European bond funds outdrew passive in Q2 2026

Active European bond funds collected EUR47.5 billion in the second quarter of 2026, against EUR36.5 billion for their passive counterparts, according to Morningstar data reported by ETF Express. Passive funds still captured 75 per cent of overall European fund inflows in the quarter, excluding money-market funds. Equity ran the other way: passive equity took EUR89.9 billion, while active equity lost EUR17.8 billion.

The performance record behind the bond flows is more mixed than the flow split. Morningstar's latest European Active/Passive Barometer found that 46.8 per cent of active bond funds survived and outperformed the passive composite for their category over the year through June 2026. The success rate rose to 51.1 per cent over three years and stood at 47.5 per cent over five. Over 10 years it fell to 33.5 per cent, still far above the 11.9 per cent success rate for active equity managers.

Mara Dobrescu, a Morningstar senior principal, points to market structure. "The case for active management is fundamentally stronger in fixed income than in equities because bond markets are structurally less efficient." Traditional bond indexes add weight to the biggest borrowers, while equity indexes weight companies as their market values rise. With millions of individual bonds, many of them trading infrequently, active managers have more room to make calls on credit quality, duration, liquidity and individual security selection.

Dobrescu said the opportunities are greatest in areas that are "less liquid, less homogeneous, or more complex" — high yield, emerging-market debt, securitised credit and other specialist sectors. The 10-year success rates follow that pattern: 45.3 per cent for active euro corporate bond managers, 40.9 per cent for global emerging-market bond managers and 46.5 per cent for local-currency emerging-market debt. Active euro government-bond managers managed 18.5 per cent, and their GBP peers 10.3 per cent.

The 10-year success rate for active fixed-income funds in the lowest-fee quintile was 40.7 per cent, against 24.6 per cent in the highest-fee quintile, a gap of 16.1 percentage points. Dobrescu's summary of the cost evidence: "The strongest case is not for active management at any price, but for reasonably priced active strategies..."

What the data covers matters as much as what it shows. These are European funds measured through June 2026, and the barometer's success rate counts funds that both survived and beat a passive composite, so a manager that closed counts as a failure in the tally. The segment spread is the more useful line for allocators than the 33.5 per cent headline: 10-year odds in local-currency emerging-market debt are more than four times those in GBP government bonds. The flow split shows European investors adding to active bond funds in a quarter when they kept buying passive equity — a reminder, as this publication has argued, that the active wrapper migration's next leg runs through Europe. Fees are the variable a manager can control, and the quintile gap suggests two funds in the same category can produce quite different outcomes depending on what the investor pays.