Bonds Lead Q1 Sustainable Inflows
- Net flows: Sustainable flows posted their fifth consecutive negative quarter
(-£610m), albeit on an upward trend from Q3 2025.
- Asset class: Equities again drove outflows (-£1.11bn), although bond funds saw a second consecutive quarter of inflows (+£966m).
- Bond Global Corporates GBP was the leading sustainable classification for the second consecutive quarter (+£1.1bn) in contrast to conventional redemptions.
- Bond GBP Corporates saw the largest redemptions (-£0.69bn). This compares to substantially larger outflows (-£2.70bn) for their conventional peers.
- SDR: Net redemptions to SDR funds over Q1 2026 were £1.57bn, following on from FY 2025’s redemptions of £4.18bn.
Sustainable Asset Class Growth
Chart 1: Sustainable Asset Class AUM, 2016 to 2025 (£bn)
Source: LSEG Lipper
UK sustainable assets held in mutual funds and ETFs fell from £240.02bn at the end of 2025 to £231.03bn
(-3.74%), faster than conventional UK mutual fund and ETF assets, which fell by 2.28%. Sustainable assets, as defined by Lipper, make up 9.25% of the UK mutual fund and ETF market, down from 9.38% at the end of 2025.
Equity funds make up most sustainable assets, at 70.96% (down on the previous quarter), followed by bond (13.87%, up), mixed assets (13.1%, up), and MMFs (1.32%, up). Alternatives and real estate funds make up less than 0.5% each of sustainable assets. However, the former has seen strong growth on the previous quarter in absolute terms, from £333m to £860m.
Sustainable Asset Flows
Chart 2: Five-year quarterly flows, to Q1 2026 (£bn)
Source: LSEG Lipper
Sustainable flows posted their fifth consecutive negative quarter (-£610m, albeit on an upward trend from Q3 2025’s -£10.25bn and Q3’s -£5.41bn). As can be seen from chart 2, there hadn’t been a negative quarter over the period of analysis prior to 2025.
As had previously been the case, this was largely down large redemptions from sustainable equity funds (-£1.11bn, from Q4 2025’s -£5.65bn). What’s also noticeable is that the previous larger net redemptions are also highly concentrated, with this quarter’s being more diffuse.
Despite much smaller total redemptions, mixed-assets negative flows were in line with the previous quarter
(-£559m). Commodity funds (-£11m) and real estate (-£2m) also saw modest redemptions.
However, bond funds saw a second consecutive quarter of inflows (+£966m), their strongest since Q4 2024, as did alternatives (+£25m) and MMFs (+£78m).
Sustainable versus Conventional Flows by Asset Class
Chart 3: Asset Class Flows, Sustainable v Conventional, Q1 2026 (£bn)
Source: LSEG Lipper
Total sustainable flows for Q1 2026 were -£0.61bn, compared to -£1.20bn for conventional funds. However, given that sustainable assets are less than 10% of total fund assets, it’s clear that redemptions have fallen disproportionately on the former. Excluding MMFs, sustainable flows were slightly higher at -£0.68bn, versus -£1.58bn for conventional funds.
Equity funds were again the primary driver of flows, with sustainable equity seeing outflows (-£1.11bn). While this was markedly lower than the £5.67bn redeemed from conventional equity funds, it still indicates a proportionally larger impact on sustainable equities given their relative total net assets. Mixed assets also detracted from sustainable flows (-£0.56bn), while conventional peers attracted £5.10bn, reinforcing a persistent divergence between the two segments. This is a very different pattern from the early part of the decade, when sustainable funds got most mixed-assets inflows.
In contrast, fixed income provided support for sustainable flows, with bond funds attracting £0.97bn, albeit still trailing the £2.50bn of inflows into conventional equivalents. Alternatives also saw modest sustainable inflows (+£0.03bn) compared to £1.72bn for conventional equivalents. In general, we’re seeing increasing demand for alternative strategies, as investors seek downside protection in the face of increasingly uncertain market trajectory.
Sustainable Flows by Classification
Largest positive flows
Chart 4: Largest Positive Sustainable Flows by LSEG Lipper Global Classification, Q1 2026 (£bn) Versus Conventional Equivalents
Source: LSEG Lipper
Overall, while bonds dominate sustainable inflows, the contrast with conventional flows varies significantly by classification. The composition of top sustainable inflows in Q1 2026 continues to be led by fixed income, though with notable dispersion between sustainable and conventional peers.
Bond Global Corporates GBP was the leading sustainable classification for the second consecutive quarter, attracting £1.1bn, in contrast to £1.04bn in redemptions from conventional equivalents. Bond Global Corporates USD also attracted £0.17bn, in the same direction as their conventional peers, which saw inflows of £0.57bn, as was similarly the case with Bond Global GBP, with £0.11bn of sustainable inflows versus £0.44bn conventional funds.
While Bond Global USD saw significant redemptions over the quarter (-£2.91bn in total), their sustainable equivalents attracted a modest £0.08bn.
Outside fixed income, Equity Sector Real Estate Global was the largest equity contributor, taking in £0.26bn, while conventional peers saw minor outflows (-£0.07bn). Sustainable Equity US also saw small-scale inflows of £0.06bn, alongside positive conventional flows of £0.18bn—both much reduced from their peaks of a couple of years back.
Mixed Asset GBP Flexible was the only sustainable mixed-assets classification to make the table, attracting £0.08bn sustainably and £0.47bn conventional.
Largest negative flows
Chart 5: Largest Negative Sustainable Flows by LSEG Lipper Global Classification, Q1 2026 (£bn) Versus Conventional Equivalents
Source: LSEG Lipper
Sustainable outflows in Q1 2026 were again concentrated across a mix of fixed income and equity classifications, albeit with Bond GBP Corporates seeing the largest redemptions (-£0.69bn). This compares to substantially larger outflows (-£2.70bn) for conventional peers.
Equities also featured prominently among the largest detractors. Equity Global Small & Mid Cap (-£0.39bn), Equity UK (-£0.23bn), and Equity Global (-£0.16bn) all saw sustained redemptions, broadly in line with negative conventional flows, particularly for Equity UK (-£2.23bn) and Equity Global (-£1.92bn). Equity Asia Pacific ex Japan also saw outflows of £0.10bn, alongside outflows of £1.15bn from conventional funds.
Mixed assets continued to show a marked divergence. Mixed Asset GBP Aggressive – Global (-£0.29bn) and Mixed Asset GBP Balanced – Global (-£0.14bn) both saw sustainable outflows despite significant conventional inflows of £2.90bn and £2.48bn, respectively, while sustainable Mixed Asset GBP Balanced – UK funds saw outflows of £0.18bn, as flows to their convention peers were flat. This marks a stark reversal from four to five years ago, when sustainable mixed-assets funds were among the strongest contributors to inflows in this asset class.
Sustainable Equity Japan (-£0.18bn), Equity Global (-£0.16bn), and Equity Asia Pacific ex Japan (-£0.1bn) suffered redemptions along with their conventional peers despite Japan and APAC having outperformed global equities over 2025, while Equity Global Income (-£0.15bn) saw outflows as its conventional equivalents drew in £0.23bn.
Just outside the table, sustainable Equity Emerging Markets Global saw relatively small redemptions despite the £2.30bn of inflows to the classification as a whole.
Flows by Asset Manager
Chart 6: Largest Positive Sustainable Flows by Promoter, FY 2025 (£bn)
Source: LSEG Lipper
Equity strategies dominate flows across most promoters, while BNP Paribas and HSBC lead in fixed income, with BlackRock ahead in equities and mixed assets.
Flows by promoter were led by BlackRock, which attracted £844m in sustainable assets, driven primarily by equity inflows of £540m and supported by £175m into mixed assets and £129m into bonds. UBS Asset Management followed with £382m of inflows, almost entirely from equities (£373m), highlighting a strong concentration in that asset class.
BNP Paribas ranked third with £288m, distinguished by the largest bond inflows among peers at £332m, albeit partially offset by outflows from mixed assets (-£34m) and marginal equity redemptions (-£10m). Legal & General (+£269m) and Dimensional (+£238m) also saw solid inflows, both driven predominantly by equities (+£248m and £170m, respectively), with Legal & General also gathering £22m in mixed assets.
Further down the table, Amundi (+£198m) and Mercer (+£170m) maintained momentum through equity inflows alone, while Mirova (+£154m) combined £128m in equities with £26m in bonds.
SDR: AUM and Flows
Chart 7: SDR Categories AUM, March 2026 (£bn)
Source: LSEG Lipper
LSEG Lipper records £28.73bn of assets in SDR funds: Sustainability Focus, £33.37bn (86.15%); Sustainability Impact, £2.27bn (5.87%); Sustainability Improvers, £2.1bn (5.41%); and Sustainability Mixed Goals, £0.9bn (2.56%).
Chart 8: SDR Categories Net Flows by Asset Class, Q1 2026 (£bn)
Source: LSEG Lipper
Net aggregate redemptions to SDR funds over Q1 2026 were £1.57bn, following on from FY 2025’s £4.18bn.
As had previously been the case, Sustainability Focus funds suffered worst, with outflows of £1.67bn (bonds: -£49m; equity -£1.1bn; mixed assets -£528m). All asset classes within Sustainability Focus, therefore, suffered outflows over Q1.
Sustainability Impact funds saw net outflows of £164m (bonds -£4m; equity -£158m; and real estate -£2m).
Sustainability Improvers, however, enjoyed their second consecutive quarter of net inflows (+£276m), driven by bond funds (bond +£336m; equity -£29m; mixed assets -£31m). Sustainability Mixed Goals saw Q1 2026 redemptions of £12m, all to mixed-assets funds.
Bond funds were therefore the only asset type that saw inflows over the quarter, attracting £283m.
Note that this report has narrowed its focus from broad Sustainable funds—those which indicate some form of Sustainable strategy in their fund documentation—to a smaller set of sustainable funds, defined as all SFDR Article 9 funds plus Lipper Responsible Investment Attribute funds reduced to those containing indicative sustainable keywords in the fund name.
