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Chart 1: Assets Under Management of ETFs Listed on the LSE by Asset Type, December 30, 2024 (£bn)
Source: LSEG Lipper
Despite a worrying month for equities, with one of the largest drawdowns in the S&P 500 and MSCI ACWI since the global financial crisis, equity share of LSE-listed ETF assets continues to creep upwards, now making up fourth-fifths of the total. Equity and bond funds comprise the bulk of total assets at 80% and 17.7%, respectively.
Total ETF assets were to £1.27trn in December, growing 30.4% year on year. Money market funds (MMFs) saw the greatest growth in percentage terms over the year (62.5%), but from a low base. More meaningful, probably, is the growth of equity assets, 37.6%.
Asset growth was almost flat on a month-on-month basis, with only MMFs (7.7%) and equity (0.8%) seeing any growth.
Chart 2: Estimated Net Flows in ETFs Listed on the LSE by Asset Type, December 2024 (£bn)
Source: LSEG Lipper
Total flows for December, at £21.54bn, were in line with November’s £21.44bn and considerably up from October’s £13.76bn. Flows for the full year were £158.94bn. December’s rollercoaster ride for the asset class notwithstanding, both monthly and annual flows were driven by equities, which took £19.91bn and £142.21bn, respectively.
That left all the other asset classes standing, with money market ETFs taking £949m (£5.59bn for the year), bonds £909m (£11.99bn), and mixed-assets funds £9m (redemptions of £597m).
Meanwhile, mixed assets have had a poor year in terms of asset gathering, with outflows of £597m.
Over the month, alternatives shed £28m (-£216m FY) and commodities saw a substantial outflows of £490m, though over the full year were down a modest £41m.
Chart 3: Ten Best-Selling Lipper Global Classifications, December 2024 (£bn)
Source: LSEG Lipper
The top three flows were the same as the previous month. Despite a turbulent (and negative) December for the S&P 500, ETF investors continued to back US equities, as £13.29bn flowed into Equity US funds over the month, making £65.19bn over the full year—both figures well ahead of any other classification. As can be seen from the table below, it’s plain vanilla cap-weighted rather than equal-weighted funds taking the lion’s share of assets here, as investors continue to back the mega-cap run of the US market.
Source: LSEG Lipper
Equity Global was the second-best selling classification, taking £4.59bn (£45.4bn for the full year), with the bulk of the money going to plain vanilla index-tracking products. However, as can be seen from the table below, there is still significant interest in sustainable index products.
Source: LSEG Lipper
Although US small caps lagged their large peers over both the year and fourth quarter, this corner of the market continues to interest investors, with Equity US Small & Mid Cap taking £1.54bn (£7.18bn FY).
Staying with the US, while the Fed spooked markets over the month with gloomy forward guidance for rate cuts, this has helped the attractiveness of Money Market USD funds, which netted £892m (£4.76bn).
Chart 4: Ten Largest Outflows by Lipper Global Classification, December 2024 (£bn)
Source: LSEG Lipper
While not significantly reflected in the previous month’s LSE-listed ETFs, November saw the largest redemptions globally from Bond USD Government mutual funds and ETFs since 2020. That fed through to December ETF numbers, with Bond USD Government ETFs suffering redemptions of £603m (-£1.07bn for the year).
In line with the previous month, as investors pulled £525m from Equity China ETFs, but with just £168m of redemptions for the year. While fundamentals for many Chinese companies look comparatively good, the political environment—both internally and externally—is problematic. Given that the market is considered uninvestable by many, it is perhaps remarkable that redemptions over the year are not greater.
Defensive stocks such as healthcare have lagged over the fourth quarter, with the FTSE All World Healthcare index heading down since the start of September, and this was reflected in significant outflows for Equity Sector Healthcare funds, of £505m (£104m). And, while broad commodity indices are up over the quarter and year, £499m was pulled from Commodity Blended funds over the month (-£104m).
Finally, while we noted a significant pickup in Equity UK mutual funds and ETFs among domestic investors in October and November, this isn’t reflected in this data set, with £343m of redemptions for December (-£877m). It remains to be seen whether those that have taken the plunge are prescient or not, as the FTSE 100 is still some way off its mid-May peak.
Chart 5: Sustainable ETF Sales (LHS, £m) and Estimated Net Flows (RHS, £bn), December 2024
Source: LSEG Lipper
Total sustainable flows were £2.09bn, exceeding the previous month’s £1.5bn. Sustainable equity ETFs netted £1.67bn, while their bond peers netted £421m, rebounding from the previous month’s outflows of £352m, and broadly in line with October.
Some £182.45bn of ETF assets on the London Stock Exchange are defined by Lipper Research as sustainable, held across 423 vehicles (see definition below). The bulk (84.26%) are equity, with 15.74% in bond vehicles. There is a tiny amount in MMFs, but no more than that of a rounding error, despite the growing appeal of MMF ETFs overall.
As can be seen from the table below, top-selling sustainable fund classifications only loosely reflect “conventional” flows this month, with the top-selling funds being Equity US. Equity Europe was not a popular category overall, though Bond EUR Corporates Short Term did net £562m for the month.
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
Trading volumes dipped from the previous month’s peak, posting £13.28bn in December. The average traded value for ETFs as a percentage of all trades in December on the London Stock Exchange was 16.67%, in line with November. The trend over the past year is upwards in both relative and absolute terms.
Top Traded ETFs on London Stock Exchange in December 2024
Source: LSEG
Chart 7: Active and Passive, Total Net Assets (LHS, %), and Estimated Net Flows (RHS, £bn), December 2024
Source: LSEG Lipper
There are 104 active and 1,750 passive ETFs listed on the LSE, with nine of the 19 new launches on the LSE in December being active ETFs. Active ETFs total net assets were 2.12% of the total, or £27.02bn. Active ETFs saw inflows of £933m, up from November’s £879m.
Flows were dominated by JP Morgan, which took £860m (see table below). Invesco had the second-largest sustainable flows, at £25m.
Meanwhile, passive ETFs attracted £20.32bn.
Table: Five Best-selling Active ETFs, December 2024 (£m)
Source: LSEG Lipper
Chart 8: New listings on the London Stock Exchange since 2004
Source: LSEG
There have been 214 launches year to date—only beaten by 2018, with 247. Some 19 were launched in December—a bumper month, with 14 equity, four bond, and one alternatives, the latter from First Trust (see table on next page). JP Morgan has been busiest, with seven active ETF listings, both equity and bond. Fidelity has launched a couple of Quality Value products, and there’s topical AI and semiconductor supply chain offerings from iShares and First Trust, respectively.
New Launches, December 2024
Chart 9: 10 Best-Selling ETF Promoter for ETFs Listed on LSE, December 2024 (£bn)
Source: LSEG Lipper
There are 31 promoters with ETFs on the LSE. American Century Investments is a new entrant, with an emerging markets equity launch.
Seven had flows of more than £1bn over December, the same as in November, with the largest being BlackRock (£5.97, down on the previous month’s £6.75bn). The company netted £6.71bn in equity but suffered £1.06bn of bond redemptions, while second-placed Amundi’s £3.55bn netted all this and more with equity ETFs.
Eight providers suffered outflows, as was the case in November.
[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.