Headline figures
Assets Under Management[1]
Chart 1: Assets Under Management of ETFs Listed on the LSE by Asset Type, September 30, 2024 (£bn)
Source: LSEG Lipper
Total ETF assets were £1.17bn in September, growing 30.4% on an annual basis. Money market funds (MMFs) saw the greatest growth in percentage terms on year-on-year basis (48.3%), but from a low base.
On an annualised basis, equities grew by 36.9% and bonds by 10.8%. Conversely, mixed-assets ETFs were once more the main negative movers, down to 69.1% of their assets 12 months ago, and currently 0.1% of ETF assets. Commodity and alternatives assets also shrank on a 12-month view, with alternatives assets seeing the only monthly drop, at 95.9% of their August value.
Equity and bond funds comprise the bulk of the total: at 78.7% and 19%, respectively.
Flows
Flows by Asset Type
Chart 2: Estimated Net Flows in ETFs Listed on the LSE by Asset Type, September 2024 (£bn)
Source: LSEG Lipper
Despite the market volatility during the quarter, most equities and bonds finished Q3 in positive territory. Total flows for September were up from August’s £13.5bn, at £15.05bn (£102.58bn YTD).
Equity ETFs again saw the largest inflows, at £11.63bn, well up on August’s £10.74bn (and £86.81bn YTD). Bonds attracted almost double August’s £1.6bn, at £3.04bn (£11.63bn YTD), while MMFs were in the black to £372m (£4.69bn YTD); commodity ETFs saw inflows of £129m (£400m YTD); mixed assets at £3m (-£610m YTD), with alternatives seeing the outflows of £121m (-£336m).
Largest Inflows
Chart 3: Ten Best-Selling Lipper Global Classifications, September 2024 (£bn)
Source: LSEG Lipper
Swapping positions on the previous month, and despite US equities lagging, Equity US (£5bn/£32.53bn YTD) and Equity Global (£3.56bn/£37.63bn) were the two top-selling classifications for September. In August, we pondered whether market volatility would see the return to prominence of equally weighted US ETFs and answered in the negative. That is certainly no longer the case. What stands out from the table below is the prominent place of Equal Weight ETFs. Indeed, over the month, £2.52bn of that £5bn has gone to equal-weighted ETFs (50.4%), while YTD that has only been £4.47bn (13.7%). It looks a lot like investors are spreading their US large-cap bets away from the Magnificent Seven. In a similar vein, Equity Sector—Information Tech funds, though attracting £5.85bn over 12 months, only took £10m in September.
Source: LSEG Lipper
Of note in the Equity Global table below is that, aside from the ‘plain vanilla’ index exposure, ESG fund flows play a
significant role.
Source: LSEG Lipper
Bond EUR Corporates was the best-selling fixed income classification for the third month running, with inflows of £1.28bn, followed once more by Bond USD Corporates (£661m). Short yields declined more than long yields in the US, UK, and Germany, seeing Money Market USD tumble down the rankings from August’s third place, to fourteenth (£239m), likely propelled by the Fed’s 50 basis points cut.
In Q3, equities were broadly up. The FTSE Emerging index, FTSE 250, FTSE 100, and Asia Pacific outperformed FTSE All World, while Japan, Europe, and the US lagged, according to FTSE Russell research. UK small caps had a strong rebound over the quarter amid easing UK yields and resilient growth. However, Equity UK Small & Mid Cap ETFs only took £36m for the month, with Equity Global Small & Mid Cap netting £42m.
On average, Real Estate led sector returns (Equity Sector Real Estate UK saw small redemptions of £17m), followed by Utilities (Equity Sector Utilities took £233m), and Staples (Equity Sector Consumer Staples took £229m).
Finally, in this section, no flows commentary would be complete without a word on Equity China. These funds have seen outflows of £1.14bn over 12 months—£145m in August—in the face of miserable market sentiment, with a bounce-back of £255m in September, following bullish Chinese moves.
Largest Outflows
Chart 4: Ten Largest Outflows by Lipper Global Classification, September 2024 (£bn)
Source: LSEG Lipper
Equity Japan funds plummeted from eighth largest outflows in August to the largest in September (-£1.16bn). Investors seem to have determined there is no juice left in Japan’s H1 rally and are getting while the getting is good—for now, at least. There’s still a lot of talk that the Tokyo Stock Exchange reforms will drive shareholder value, but investors aren’t buying it.
Bond USD Government sales increased, rising to £757m. There are many reasons why this could be so: potentially the robust US economy shifting investors to riskier assets or possibly the weakening dollar.
Equity UK continued its negative run, with redemptions of £268m, while a poor month for energy was reflected in the £266m outflows from Equity Theme—Energy.
Sustainable ETFs
Chart 5: Sustainable ETF Sales (LHS, £m) and Estimated Net Flows (RHS, £bn), September 2024
Source: LSEG Lipper
Total sustainable flows were strong, at £2.9bn, following a slack summer. Equity ETFs saw a considerable rebound, attracting of £2.44bn after August’s redemptions, while their fixed income peers took £453m, slightly down on the previous month’s £545m.
Some £171.38bn of ETF assets on the London Stock Exchange are defined by Lipper Research as sustainable, slightly up from August’s £167.97bn, held across 425 vehicles (see definition below). The bulk (83.7%) are equity, with 16.3% in bond vehicles.
Source: LSEG Lipper
The Sustainable section has a narrower and stricter focus than those which indicate some form of ESG strategy in their fund documentation—to a smaller group of sustainable funds, defined as all SFDR article 9 funds plus all Lipper Responsible Investment Attribute funds reduced to those containing indicative sustainable keywords in the fund name.
Trading Volumes
Chart 6: ETF Turnover (GBP bn) and as a % of Total London Stock Exchange Order Book Turnover
Source: LSEG Lipper
The numbers are down—both relative and absolute—from August’s all-time peak of £13.64bn/16.46%. The average traded value for ETFs in September on the London Stock Exchange was £11.61bn/12.6% for September. That’s more in line with recent norms. However, the trend over the period covered by the graph is clearly upwards.
Top Traded ETFs on London Stock Exchange in September 2024
Source: LSEG
The table above reflects the dominant flows to Equity US and Global funds (five out of the top 10). However, we’re seeing a gradual increase in interest in UK equity ETFs, with two FTSE 100 and one FTSE 250 funds, despite quite flat performance over August and September.
Active ETFs
Chart 7: Active and Passive, Total Net Assets (LHS, %), and Estimated Net Flows (RHS, £bn), September 2024
Source: LSEG Lipper
There are 84 active and 1,714 passive ETFs listed on the LSE. Active ETFs total net assets were 1.91% of the total, or £22.37bn, up from August’s £20.61bn. Active ETFs saw inflows of £782m, down from August’s £1.04bn. Flows were dominated by JP Morgan, which took £715m (see table below). Invesco had the second-largest sustainable flows, at £38m.
Meanwhile, passive ETFs attracted £14.26bn.
Table: Five Best-selling Active ETFs, September 2024 (£m)
Source: LSEG Lipper
New Listings
Chart 8: New listings on the London Stock Exchange since 2004
Source: LSEG Lipper
There have been 128 launches year to date, with 10 launched in September—five equity, three bond, one alternative, and one money market (see table on next page). BlackRock has launched four, followed by Global X, with three equity funds, focusing on infrastructure, defence technology, and AI.
Of note is Fair Oaks Capital’s UK listing entry, with its actively managed Fair Oaks AAA CLO Fund UCITS ETF EUR Dist, which invests in AAA-rated US and European CLOs. The primary fund (acc) has been running since 2019.
New Launches, September 2024
Source: LSEG Lipper
Flows by Promoter
Chart 9: 10 Best-Selling ETF Promoter for ETFs Listed on LSE, September 2024 (£bn)
Source: LSEG Lipper
There are 28 promoters with ETFs on the LSE. Six had flows of more than £1bn over September, two more than in August, with the largest being BlackRock (£5.78bn). BlackRock netted £3.64bn in equity and £1.98m in bond flows, while the bulk of second-placed DWS’ £3.32bn went to equity ETFs (£3.03bn).
Nine providers suffered outflows.
[1] This report covers all assets under management and estimated net flows for ETFs listed on the London Stock Exchange. This means while turnover and trading volume are measures that are taken per exchange, flows, and assets under management can only be calculated on a pan-European basis, since most ETFs in this report are cross-listed on various exchanges.
