With net inflows of €70.8 billion the figure surpassed the previous high of €51 billion recorded in 2008, the firm said this morning.

Assets under management in ETFs went up by 24% year-on-year to €467.4 billion.

The Morningstar report stated: “The record-breaking trend began early, as the industry posted its highest-ever quarterly flows in the first quarter of the year, and after a second-quarter lull, picked up a record pace again in the second half of the year.

“The combination of record net inflows plus overall capital appreciation across most asset classes of €19.6 billion pushed assets under management in ETFs up by 24% year-on-year to €467.4 billion."

Jose Garcia-Zarate, senior passive strategies research analyst for Morningstar, said: “The data seems to indicate that the European ETP industry has entered a phase of strong growth; giving credence to industry predictions that foresee AUM hitting the €1 trillion mark by 2020.

“This trend is underpinned by growing awareness of the European investor community on the benefits of low-cost investing.”

Morningstar’s 2015 ETF fund flows report also reported that:

· Investors showed a clear preference for equity market exposure—equity ETFs gathered €42.7 billion of net new money (60% of total inflows) during the year.

· Investors expressed a strong preference for European stocks, while emerging markets—particularly China—went out of favour.

· Fixed income continued to attract solid interest in spite of low yields and increased volatility in areas such as high yield.

· iShares retained its strong leading position with 46% market share. db X-trackers and Lyxor reaped the rewards of switching to physical replication as the wider European investor base has shown a clear preference for physical products over the past few years.