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Chart 1: Assets Under Management of ETFs Listed on the LSE by Asset Type, October 30, 2024 (£bn)
Source: LSEG Lipper
Total ETF assets rose to £1.2bn in October, growing 35.4% year-on-year. Money market funds (MMFs) saw the greatest growth in percentage terms over the year (57.8%), but from a low base.
All asset classes, apart from mixed assets, grew on a month-on-month basis. Over 12 months, equities grew by 43.3% and bonds by 11.7%. Conversely, mixed-assets ETFs were once more the main negative movers, down to 69.4% of their assets 12 months ago, and currently 0.1% of ETF assets. Commodity also shrank on a 12-month view.
Equity and bond funds comprise the bulk of total assets: at 78.9% and 18.7%, respectively.
Chart 2: Estimated Net Flows in ETFs Listed on the LSE by Asset Type, October 2024 (£bn)
Source: LSEG Lipper
Total flows for October were down from September’s £15.05bn, at £13.76bn (£116.47bn YTD).
Bond yields rose in anticipation of the budget on 30 October, and kept going in its wake, as bond markets digested the news. However, it’s hard to disagree with Toby Nangle in the FT that “there will be no LDImageddon II this autumn,” even if it’s one of the ugliest epithets I’ve come across. Indeed, ETF investors were in broad agreement, and flows to the asset class, while subdued, were in positive territory (£381m) for the month.
Equity ETFs again saw the largest inflows, at £13.36bn, up on September’s £11.63bn (and £100bn YTD), despite reduced flows overall. Alternatives were also in positive territory, taking £116m, but with redemption of £219m YTD, while mixed assets took a modest £1.4m (-£608m YTD). On the negative side of the equation, MMFs shed £58m (inflows of £4.63bn YTD), while commodity ETFs lost £47m (inflows of £353m YTD).
Chart 3: Ten Best-Selling Lipper Global Classifications, October 2024 (£bn)
Source: LSEG Lipper
Following a positive month for the S&P 500, Equity US again took the top spot (£5.5bn, up from September’s £5bn). In September, £2.52bn of that £5bn went to equal-weighted ETFs (50.4%), That doesn’t seem to have started a trend, as in October, Equity US flows snapped back to cap-weighted plays, as equal-weighted S&P ETFs netted only about 19% of these assets, despite the second-best seller being an equally weighted product.
Source: LSEG Lipper
Equity Global was the second-best selling classification (£4.75bn, up from £3.56bn), with the bulk of the money going to plain-vanilla index-tracking products (see table below). So, although overall flows were down on the previous month, October sees an increasing concentration in the top two classifications.
Source: LSEG Lipper
Despite the tightness of spreads continuing to play on investors’ minds, Bond EUR High Yield was the third most popular classification, attracting £1.08bn, followed by Equity US Small & Mid Cap, at £774m.
Some investors seem to be on board with the China fiscal stimulus story, as Equity China netted £532m over the month (-£54m, over 12 months), just behind Equity Emerging Mkts Global, at £641m (£6.91bn over 12 months).
Chart 4: Ten Largest Outflows by Lipper Global Classification, October 2024 (£bn)
Source: LSEG Lipper
Bond EUR Corporates saw the largest classification outflows in October, losing £1.46bn. That’s both way ahead of the next-worst-selling classifications, and a reversal of September’s trades, where these funds were the third-best-selling classification.
What’s interesting here is that, despite all the hype about (with apologies) “LDImargeddon”, the Bank of England signalling further quantitative tightening, fears of higher UK government borrowing, and the fact that the five classifications with the worst outflows are all fixed income, none of these are UK govvies, or indeed sterling-denominated. However, UK investors do seem to be exiting dollar-denominated debt, following treasury yields tightening from their mid-September lows and the Fed’s signalling of a lower-rate trajectory and October’s cut—something that’s likely had an impact on the £107m redemption from Money Market USD ETFs.
Lastly, a comparatively good month for Equity UK, with only £82m of redemptions (-£1.25bn over 12 months).
Chart 5: Sustainable ETF Sales (LHS, £m) and Estimated Net Flows (RHS, £bn), October 2024
Source: LSEG Lipper
Total sustainable flows were down from September’s £2.9bn, attracting £1.8bn. Equity ETFs netted £1.42bn, while their fixed income peers took £410m, only slightly down on the previous month’s £453m.
Some £174.84bn of ETF assets on the London Stock Exchange are defined by Lipper Research as sustainable, slightly up from September’s £171.38bn, held across 428 vehicles (see definition below). The bulk (83.6%) are equity, with 16.4% 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.
Chart 6: ETF Turnover (GBP bn) and as a % of Total London Stock Exchange Order Book Turnover
Source: LSEG Lipper
Trading rebounded from September’s lull, topping August’s previous peak of £13.64bn, with volumes now hitting £14.14bn. The average traded value for ETFs as a percentage of all trades in October on the London Stock Exchange was 15.4%, not quite meeting that of August. Nevertheless, the trend over the past year is upwards, in both relative and absolute terms.
Top Traded ETFs on London Stock Exchange in October 2024
Source: LSEG
The table above reflects the dominant flows to Equity US and Global funds (four out of the top 10), although a touch down on the previous month. UK equity mid-caps retain investors’ interest, and it’s interesting to see activity around Equity IT, in the form of an S&P 500 play.
Chart 7: Active and Passive, Total Net Assets (LHS, %), and Estimated Net Flows (RHS, £bn), October 2024
Source: LSEG Lipper
There are 90 active and 1,726 passive ETFs listed on the LSE. Active ETFs total net assets were 1.97% of the total, or £24.21bn, up from September’s £22.37bn. Active ETFs saw inflows of £1.11bn, up from September’s £782m, and so considerably ahead of their asset weighting.
Flows were dominated by JP Morgan, which took £1.03bn (see table below). Franklin Templeton had the second-largest sustainable flows, at £23m, with all this and more being netted by a green bond fund.
Meanwhile, passive ETFs attracted £12.65bn.
Table: Five Best-selling Active ETFs, October 2024 (£m)
Source: LSEG Lipper
Chart 8: New listings on the London Stock Exchange since 2004
Source: LSEG Lipper
There have been 157 launches year to date, with 15 launched in October—nine equity, five bond, and one alternative (see table on next page). BlackRock’s iShares has launched seven, including listed private equity and global infrastructure, followed by Fidelity and Franklin which have launched three each. Fidelity’s are all bond, while Franklin’s three equity EM ETFs, include an EM ex China fund, something rather topical currently.
New Launches, October 2024
Source: LSEG Lipper
Chart 9: 10 Best-Selling ETF Promoter for ETFs Listed on LSE, October 2024 (£bn)
Source: LSEG Lipper
There are 29 promoters with ETFs on the LSE. Five had flows of more than £1bn over October, one less than in September, with the largest being BlackRock (£3.33bn, down from September’s £5.78bn). BlackRock netted £3.83bn in equity but suffered £551m of bond redemptions, while the bulk of second-placed DWS’ £3.26bn went to equity ETFs (£3.11bn).
Eleven providers suffered outflows, up from September’s nine.
[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.