Euro government bond funds and ETFs have returned 0.64% on average this year, with Vanguard and Eurizon leading the category. Despite ECB interest rate cuts, investors continue to flock to euro government bond strategies, with EUR 9.40 billion allocated in the first seven months of 2025, totaling EUR 168.57 billion in assets.

Inflows into euro government bonds have increased in recent years, with a 5.2% rise in organic growth in 2025, despite challenges like public debt sustainability concerns and political instability. The Morningstar Eurozone Treasury Bond Index is up 0.56% this year, facing selloffs in the first part of the year and in recent weeks.

The largest euro government bond funds, including Vanguard Euro Government Bond Index Fund and Eurizon Fund II – Euro Bond Z, have shown positive returns in 2025. Vanguard’s fund has gained 0.63% this year, with an average annual return of 1.34% over three years, while Eurizon’s fund has returned 0.47% and 1.35% annually over the same period.

The iShares Core EUR Government Bond ETF EUR Dist, with assets of EUR 6.01 billion, has gained 0.45% this year, outperforming the category average. J.P. Morgan’s EU Government Bond C (acc) EUR fund, with assets of EUR 4.29 billion, has returned 1.02% this year, surpassing the category average.

RBC BlueBay’s BlueBay Investment Grade Euro Government Bond I EUR Acc fund, with assets of EUR 4.20 billion, has returned 0.50% this year and 1.74% annually over the past three years, outperforming the category average. The fund’s flexibility in seeking alpha has been a key factor in its success, according to Morningstar analyst Giovanni Cafaro.

Read more at Morningstar: How Europe’s Largest Government Bond Funds Have Performed in 2025