February 17, 2021

Everything Flows: Where Has All the Money Gone?

by Dewi John.

Money market funds see redemptions of almost £10bn in January despite investments into return-seeking funds being only a third of this.

Asset Class View

  • Money market funds saw redemptions of -£9.84bn, reversing December’s sales of more than £8bn. Sales were down on the previous month, with bonds being the next best-selling asset class, at £1.81bn. Real estate shed £651m over the month, despite ongoing gating in direct property funds.

Active v Passive

  • Active equity has only seeped out £84m of net assets, compared to much heavier redemptions in previous months. Active managers also attracted £710m of £1.81bn bond sales over the month, reversing December’s negative flows.
  • Equity ETFs saw their share of the passive market increase to 70%, albeit with low sales overall. Bond ETFs went from 47% of December’s passive flows to redemptions of £285m in January, with passive bond mutual funds of £1.39bn.


  • Equity Global continues its strong run, taking £1.57bn (Dec 2020: £2.97bn). One (ESG-themed) fund alone took £956m. USD and GBP Global bonds funds also did well, with £889m combined flows.
  • Money Market GBP saw the heaviest outflows of £9.86bn, reversing the trend of the previous two months. Equity UK and Equity UK Income continued their negative runs, with combined redemptions of £1.44bn.

ESG Flows

  • Equity funds saw the biggest flows (£2.24bn). In contrast, non-ESG equity funds saw redemptions of £1.11bn. Despite the large negative flows of Money Market funds this month, ESG Money Market flows were positive to the tune of £896m, with one fund taking most of this.

Asset Manager View

  • Vanguard takes the top position for January, with £1.7bn of sales: almost as much as Baillie Gifford (£669m), Federated Hermes (£665m), and HSBC (£483m), which follow it in the rankings, combined.

Flows by Asset Class

Chart 1: Asset Class Flows, Active and Passive, January 2020 (£bn)

Source: Refinitiv Lipper

As money market funds are almost exclusively an active play, any month characterised by flows one way or another with this asset class will be skewed the same way. But, turning our attentions to other asset classes, active has done rather better than previous months. Active equity has only seeped out £84m of net assets, and active managers have attracted £710m of £1.81bn bond flows over January, reversing December’s negative flows.

Real estate shed £651m over the month—despite ongoing gating of some funds—which begs the question of just how substantial the negative flows will be when the flood gates are opened. Lastly, something of a subdued month for mixed assets, at net £113m.

Chart 2: Passive Asset Class Flows, Mutual Funds v ETFs, January 2021 (£bn)

Source: Refinitiv Lipper

Equity ETFs saw their share of the passive market increase once again, from £812m to £1.16bn, or 70%. However, overall sales are muted, so it remains to be seen if this is maintained when volumes increase.

The real shift has been with bonds, as ETFs went from taking 47% of December’s flows to redemptions of £285m in January, as sales of passive bond mutual funds hit £1.39bn. Some £320m was redeemed from a single 7-10-year Treasury ETF, and £144m from a (Treasury Inflation-Protected Securities) TIPS ETF.

Flows by Classification

Chart 3: Largest Positive Flows by Refinitiv Lipper Global Classification, January 2021 (£bn)

Source: Refinitiv Lipper

Equity Global continues its strong run, taking in £1.57bn (Dec 2020: £2.97bn). Exactly as in the previous month, the main money-takers are BlackRock’s ACS Climate Transition World Equity fund, smart beta vehicle L&G Global Developed Four Factor Index, and Baillie Gifford Positive Change B Acc.

Source: Refinitiv Lipper


Global bonds—both USD and GBP base currency—also did well, with £889m combined. It’s also worth nothing that Absolute Return GBP Medium has had something of a return to favour, with £458m inflows. The classification has seen £2bn in outflows over the year to the end of January. The main beneficiary of this has been Aviva Investors Multi-Strategy Target Return 3 Acc, netting £473m over the month.

Lastly, on LGC inflows, the relatively strong performance of UK small and mid caps seem to be getting some recognition, with inflows of £314m. This has been largely to the benefit of passive strategies, with Vanguard FTSE 250 UCITS ETF GBP Acc taking a £127m chunk.


Chart 4: Largest Negative Flows by Refinitiv Lipper Global Classification, January 2021 (£m)

Source: Refinitiv Lipper


I’ve removed the £9.86bn of outflows from Money Market GBP funds from Chart 4 (above), because everything else is just a blip in comparison, to highlight the trends that would otherwise be missed. But note that Money Market GBP outflows surpass the rest by more than a factor of 10, more than reversing the previous month’s positive flows of more than £8bn.

Equity UK and Equity Income UK continue their negative run, with outflows of £1.43bn between them, with £901m of this being active money. That said, Equity UK outflows are considerably smaller than for December.

Direct property remains deeply unloved, with outflows of £618m for Real Estate UK. There seems to be a trend of reallocating from direct to real estate equity, with Equity Sector Real Estate Global taking £242m. However, Equity Sector Real Estate UK saw small outflows of £16m.




ESG Flows

Chart 5: ESG Asset Class Flows, January 2021 (£m)#

Source: Refinitiv Lipper


Given that ESG Money Market funds are something of a forgotten backwater in ESG terms, it’s notable that in a month characterised by negative flows for the asset class, ethical money is in pronounced positive territory. Most of this (£769m) has gone to Blk ICS GBP Liq Envirn Aware Agency GBP Dist.

Equity funds once more see the biggest flows and, as with December, flows are negative once ESG numbers are deducted (£2.24bn versus £1.11bn). The same is true, albeit to a lesser degree, with mixed assets.

Source: Refinitiv Lipper


As in the previous two months, January’s top money-taker is BlackRock’s actively managed ACS Climate Transition World Equity X1 Acc GBP, dwarfing all other funds. Again, as with December, Baillie Gifford Positive Change B Acc is second placed. However, after that, things are switched round a little, with UBS(Irl)ETF plc-MSCI ACWI ESG Univ UCI ETF(GBPh)Aa being a notable passive entrant into the list.


Flows by Promoter

Chart 6: Largest Positive Flows by Promoter, December (£bn)

Source: Refinitiv Lipper


Lower volumes have produced something of a turnover in the top-10 fund promoter rankings for January, with only Vanguard keeping its place in the top five. By way of example, Baillie Gifford goes from ninth position in December to second in January while retaining much the same level of flows. Significant Money Market fund redemptions have affected the positions of some of the largest players.

Top-sell Vanguard saw broad-based inflows across equity, bond and mixed asset:

Source: Refinitiv Lipper

Meanwhile, Baillie Gifford’s main money-takers were a diverse range of active equity vehicles, led by a global ESG-themed fund, with a mixed-asset vehicle at number two.

Source: Refinitiv Lipper


Report Keywords ,

Get In Touch


Related Reports

European investors were further in a risk-on mode over the course of August. Given the ...

The way active managers thought and spoke about ETFs changed when ETFs started to gather ...

August 2021 marked the seventeenth consecutive month with inflows into ETFs after the ...

When the Wall Street Journal published an article about the SEC’s investigation into a ...

We have updated our Privacy Statement. Before you continue, please read our new Privacy Statement and familiarize yourself with the terms.×