Sustainable Flows Return to Positive Territory for First Time Since Q4 2024
- Net flows: Sustainable funds returned to positive territory in Q2, attracting £173m after five consecutive quarters of net redemptions.
- Bonds led Q2 sustainable inflows (+£604m), while equities remained the largest drag, (-£452m).
- Equity Global Small & Mid Cap led Q2 flows, attracting £308m, while Equity US recorded the largest sustainable outflows (-£217m).
- H1 flows: Bond Global Corporates GBP led inflows (+£1.26bn); Bond GBP Corporates was the largest detractor (-£717m).
Sustainable Asset Class Growth
Chart 1: Sustainable Asset Class AUM, 2017 to June 2026 (£bn)
Source: LSEG Lipper
UK sustainable mutual fund and ETF assets increased from £240.02bn at end-2025 to £260.45bn at end-June 2026, an 8.51% rise. Conventional assets grew by 6.54%, from £2.32tn to £2.47tn, over the same period. Sustainable funds consequently represented 9.54% of total UK fund assets, compared with 9.38% at end-2025.
Equity remained the dominant sustainable asset class. Assets rose by £15.23bn to £188.82bn and accounted for 72.50% of the total. Mixed-assets funds increased by £2.78bn to £32.74bn, equivalent to 12.57%, while bond assets added £1.44bn to reach £33.73bn, or 12.95%.
Money market assets rose to £3.19bn and represented 1.23% of sustainable assets. Alternatives increased from £333m to £1.05bn, while real estate rose from £837m to £887m. Commodity assets were the only segment to contract, falling from £42m to £34m. Compared with 2020, equity’s share rose from 61.67%, mixed assets’ share fell from 24.95%, and bonds remained broadly stable.
Sustainable Asset Flows
Chart 2: Five-year quarterly flows, to Q2 2026 (£bn)
Source: LSEG Lipper
Quarterly sustainable fund flows returned to positive territory in Q2 2026, at £173m. This ended five consecutive negative quarters, compared with redemptions of £610m in Q1 2026 and aggregate outflows of £16.93bn between Q1 2025 and Q1 2026. The quarter-on-quarter improvement was therefore £783m, although the Q2 total remained modest relative to the positive quarters recorded before 2025.
Bond funds made the largest positive contribution, attracting £604m. This was below Q1’s £966m but marked a third consecutive quarter of inflows. Money market funds added £147m, alternatives £61m and real estate £48m.
Equity funds remained the largest source of redemptions, losing £452m, although this was less than half Q1’s £1.11bn outflow. Mixed-assets funds also stayed in negative territory, with £233m redeemed, compared with £559m in Q1. Commodity funds recorded a modest £2m outflow. Combined positive contributions of £860m therefore outweighed £687m of redemptions across equity, mixed assets and commodities.
Sustainable versus Conventional Flows by Asset Class
Chart 3: Asset Class Flows, Sustainable v Conventional, Q2 2026 (£bn)
Source: LSEG Lipper
Sustainable funds attracted £173m in Q2 2026, compared with £17.36bn for their conventional peers, or 1% of net flows. Excluding money market funds, sustainable inflows were £26m, against £19.08bn for conventional products.
Bonds provided the largest sustainable inflow, at £604m, although conventional bond funds took £11.68bn (4.9%). Alternatives were also positive for both groups, with £61m of sustainable inflows versus £2.77bn conventional. Sustainable money market funds attracted £147m while conventional equivalents lost £1.72bn. Real estate showed a similar directional split: sustainable funds gained £48m as conventional funds shed £247m.
Mixed-assets funds produced the sharpest contrast in the opposite direction, with £233m redeemed from sustainable products while conventional peers attracted £8.13bn. Equity flows were negative in both segments, at £452m for sustainable funds and £3.41bn for conventional funds. Commodities completed the picture with a £2m sustainable outflow, against £162m of conventional inflows. Thus, only bonds and alternatives were positive for both sustainable and conventional funds over the quarter.
Chart 4: Asset Class Flows, Sustainable v Conventional, H1 2026 (£bn)
Source: LSEG Lipper
Sustainable funds recorded H1 2026 inflows of £387m, compared with £19.13bn for conventional funds (2%). Excluding money market products, the respective totals were £160m and £20.21bn.
Bond funds were the largest positive sustainable contributor, attracting £1.57bn, while conventional peers took £8.81bn. Sustainable money market funds added £227m despite £1.09bn of conventional redemptions. Real estate also diverged, with £47m of sustainable inflows against £502m of conventional outflows. Alternatives attracted £111m sustainably and £4.47bn conventionally. Together, these four sustainable asset classes gathered £1.96bn.
The main sustainable drags were mixed assets and equities. Mixed-assets funds lost £849m even as conventional equivalents gathered £15.10bn, the widest directional contrast in chart 4. Sustainable equity funds shed £707m, alongside £7.99bn of conventional redemptions. Commodity funds were the only other sustainable asset class in negative territory, with £13m of outflows compared with £328m of conventional inflows. Combined sustainable outflows from equities, mixed assets and commodities were £1.57bn.
Sustainable Flows by Classification
Fund Flows by Lipper Global Classification, Q2 2026
Chart 5: Ten Best and Worst Lipper Global Classifications by Estimated Net Sales, Q2 2026 (£bn)
Source: LSEG Lipper
The top-ten asset gathering classification over Q2 were relatively diversified, while the largest outflows were concentrated in equity and mixed-assets funds. The 10 positive classifications attracted £1.51bn in aggregate, compared with £1.41bn of redemptions across the 10 negative classifications. Given that each classification has attracted (or repelled) a relatively small proportion of assets relative to the classification as a whole, the chart is testimony to the tyranny of (relatively) small numbers.
Three equity classifications attracted a combined £565m. Equity Global Small & Mid Cap—which generally doesn’t get a look in in the top and bottom movers and shakers—is testimony to these small numbers. Much of this went to a single ESG-screened passive mutual fund. The classification led the overall table with £308m, against £276m of conventional redemptions. The other two were Equity Sector Real Estate Global (+£197m) and Equity Japan (+£60m, as conventional equivalents lost £1.18bn). Absolute Return Bond GBP attracted £82m, in contrast to conventional outflows £56m, respectively.
Four bond classifications appeared among the top 10, attracting a combined £546m. Bond Global USD led this group with £235m (versus +£8.33bn for their conventional peers). Bond Global Corporates GBP added £160m (-£149m conventional). Bond Global GBP took £80m, and Bond Global High Yield USD gained £71m (- £389m conventional).
Seven of the bottom 10 were equity classifications, with combined redemptions of £1.03bn. Equity US was the largest at £217m, despite £189m of conventional inflows. Pan European trends are similar, although conventional Equity US inflows are much larger, indicating the UK’s persistent equity aversion. Equity Global at £183m and Equity Global Income at £179m. Equity Sector Healthcare lost £141m, Alternative Energy £131m and Europe ex UK £127m; the latter’s conventional peers shed £2.41bn.
Three mixed-assets classifications lost £382m in aggregate: Mixed Asset GBP Aggressive–Global accounted for £231m of this despite £5.24bn of conventional inflows; Balanced–UK (-£90m) and Balanced–Global (-£61m).
Fund Flows by Lipper Global Classification, Year to Date
Chart 6: Ten Best and Worst Lipper Global Classifications by Estimated Net Sales, Year to Date (£bn)
Source: LSEG Lipper
Fixed income dominated the positive H1 classification ranking. Five bond classifications in the top 10 attracted a combined £2.07bn. Bond Global Corporates GBP led with £1.26bn, contrasting with £1.18bn of conventional redemptions. The other leading sustainable classifications were in the same direction as the asset class as a whole: Bond Global USD (+£318m), Bond Global GBP (+£193m), Bond Global Corporates USD (+£175m) and Bond Global High Yield USD (+£124m). Conventional inflows for those four ranged from £7m for high yield to £5.32bn for Bond Global USD.
Equities contributed two positive classifications, totalling £700m. That the leading equity classification should be a property surrogate—Equity Sector Real Estate Global attracted (+£453m, compared with +£17m conventional) indicates just how far sustainable equity has fallen from grace. Equity Emerging Markets Global took £247m (+£1.51bn conventional).
Mixed Asset GBP Flexible added £242m. Money Market GBP gained £233m despite £1.93bn of conventional redemptions, and Absolute Return Bond GBP attracted £144m against a £339m conventional outflow.
The negative side was split largely between equities and mixed assets. Bond GBP Corporates, however, recorded the largest individual H1 outflow, at £717m (-£1.68bn conventional). This is reflective of market appetite for globally diversified fixed income, at the expense of those with a regional focus.
Six equity classifications lost £1.16bn in aggregate, led by Equity Global Income at £327m (+£483 conventional), Equity UK at £240m (-£2.88bn) and Equity Sector Healthcare at £200m (-£104m). Equity Global lost £191m despite £811m of conventional inflows. Equity Japan lost £90m (-£1.21bn conventional), while Alternative Energy shed £112m. These last two are a tad surprising on a broad classification level, as they have outperformed broad global equity indices since mid-2025, but UK investors have been largely deaf to their siren song.
Three mixed-assets classifications lost £1.04bn: Aggressive–Global shed £525m while conventional peers took £10.07bn; Balanced–UK lost £272m and Balanced–Global £246m.
Sustainable Flows: Institutional vs Retail
Chart 7: Sustainable Asset Class Flows, Institutional v Retail, H1 2026 (£bn)
Source: LSEG Lipper
Institutional investors allocated £1.25bn to sustainable funds in H1 2026, more than offsetting £860m of retail redemptions. Institutional demand was therefore decisive in moving the overall total into positive territory. Equities showed the clearest split. Institutional investors added £620m, while retail investors withdrew £1.33bn. Mixed-assets institutional inflows were £8m, but retail redemptions reached £857m, leaving the asset class £849m in the red. However, in general, mixed assets are a more retail focused asset class, so the skew to retail (positive or negative) isn’t too surprising.
Bonds attracted money from both channels, (+£1.22bn retail/+£348m institutional). Money market inflows were institutional, at £239m, while retail investors withdrew £12m. Real estate also combined £49m of institutional inflows with £2m of retail redemptions.
Retail investors supplied the £111m net inflow to alternatives, adding £116m against a £5m institutional outflow. Commodities were the only asset class where both channels recorded redemptions, with £1m from retail investors and £12m from institutions. Across equities, bonds, money markets and real estate, institutions added £1.26bn before the small alternatives and commodity outflows.
Flows by Asset Manager
Chart 8: Largest Positive Sustainable Flows by Promoter, H1 2026 (£bn)
Source: LSEG Lipper
BlackRock led sustainable promoter flows in H1 2026 by a wide margin, attracting £2.82bn. This represented nearly 48% of the £5.90bn gathered by the 10 promoters in the chart. Equity funds supplied £2.29bn of BlackRock’s total, mixed assets £502m and bonds £21m. Fairstone ranked second with £493m, comprising £327m from equities, £122m from bonds and £44m from alternatives. HSBC followed at £454m: bond inflows of £374m and money market inflows of £233m more than offset equity redemptions of £133m and mixed-assets outflows of £20m.
Equity was the largest positive contributor for seven of the remaining nine promoters. Robeco took £409m overall, including £386m from equities, while Dimensional gathered £396m, led by £277m of equity inflows. Legal & General attracted £386m, with £330m from equities and £79m from mixed assets, partly offset by £23m of bond redemptions. BNP Paribas recorded the largest bond inflow, at £406m, but £71m of mixed-assets outflows reduced its total to £349m. Amundi, UBS Asset Management and Mercer attracted £224m, £205m and £167m, respectively; their equity contributions were £254m, £189m and £167m, with Amundi partly offset by £30m of bond redemptions. Across the top 10 promoters, equities contributed £4.10bn, bonds £1.03bn, mixed assets £490m, money markets £233m and alternatives £44m.
SDR: AUM and Flows
Chart 9: SDR Categories AUM June 2026 (£bn)
Source: LSEG Lipper
LSEG Lipper records £40.32bn in SDR-labelled funds at end-June 2026. Sustainability Focus accounted for £34.47bn, or 85.50% of the total. Sustainability Impact held £2.45bn (6.08%), Sustainability Improvers £2.25bn (5.58%), and Sustainability
Chart 10: SDR Categories Net Flows by Asset Class, H1 2026 (£bn)
Source: LSEG Lipper
SDR funds recorded net redemptions of £2.84bn in H1 2026.
Sustainability Focus accounted for £2.80bn, comprising equity outflows of £1.76bn, mixed-assets outflows of £958m and bond outflows of £77m. Sustainability Impact lost £307m, almost entirely from equities (£306m).
Sustainability Improvers attracted £298m, as £407m of bond inflows exceeded equity redemptions of £46m and mixed-assets outflows of £63m. Sustainability Mixed Goals lost £30m, all from mixed assets.
Across asset classes, equities suffered the largest outflow at £2.12bn, followed by mixed assets at £1.05bn and real estate at £2m. Bonds were the only positive asset class, attracting £331m.
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.
