March 17, 2021

Everything Flows: An Active Month for Fund Flows

by Dewi John.

Perhaps it’s the hope of spring reviving the market’s animal spirits, but February saw much action—positive and negative—with active flows, in contrast to positive passive flows dominating over recent months.


Asset Class View

  • Money market funds saw outflows of £12.9bn, continuing January’s negative run. Equities also lost £2.69bn. Conversely, mixed assets and bonds both saw inflows, of £2.69bn and £1.01bn, respectively.

Active v Passive

  • Some £2.23m of those equity outflows were from passive vehicles—a change from the dominant run of passive equity in recent months. Passive funds still dominated positive flows in fixed income, taking £893m of the pot.
  • Passive mutual fund and ETF flows ran in opposite directions for equity and bond funds, with equities seeing positive ETF and negative mutual fund flows, while passive bond mutual fund flows countered positive ETF flows. Mutual fund volumes were, nevertheless, much greater than their ETF counterparts.


  • Active money dominated flows in the largest money takers and losers over the month.
  • Equity Global was February’s biggest classification, taking £932m (January: £1.57bn). Mixed Asset GBP Aggressive and Equity Asia Pacific ex Japan followed, with £827m and £651m, respectively.
  • Money Market GBP saw outflows of £12.88bn, following January’s £9.86bn loss, reversing the trend of the previous two months. This was one third more than the combined flows of all positive classifications for the month. Equity Europe ex UK was the next biggest money loser, shedding £3bn.

ESG Flows

  • Equity funds benefited from £2.2bn inflows, although not enough to counter negative non-ESG flows for the asset class. Equities continue to be the dominant ESG asset class, with mixed assets following with £1.13bn, then bonds at £374m.

Asset Manager View

  • Flows to BlackRock (£29.35bn) and Vanguard (£19.15bn) overshadowed the takings of their competitors for the month.


Flows by Asset Class

Chart 1: Asset Class Flows, Active and Passive, February 2021 (£bn)

Source: Refinitiv Lipper


The largest moves by asset class in February—as in January—were with money market funds, which saw outflows of £12.9bn. Money market funds are the province of active management, so it’s no surprise that this is nearly all active money. The next big move has been out of equities—some £2.69bn, all but £404m of which is in passive strategies. This is interesting, because equity flows over the past few months have strongly favoured passives at the expense of active managers.

The only significant positive flows have been into mixed assets (£1.54bn, £1.39bn of which is active) and bonds (£1.02bn). This is February’s only real passive success story, with trackers attracting £863m of this money.


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

Source: Refinitiv Lipper

Of those passive bond flows, all and more went to mutual funds (£1.06m), as fixed income ETFs shed £169m. This is the same pattern witnessed in January, although slightly amplified. The reverse, however, it true of equities, with outflows of £2.94bn as opposed top equity inflows of £651m.


Flows by Classification

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

Source: Refinitiv Lipper


It’s another good month for Equity Global, and the second as top Lipper Global Classification, albeit with more muted flows—£932m versus £1.57bn and £2.97bn for January and December, respectively. However, there’s been a radical change in leadership, as the classification’s asset gathering has been dominated by BlackRock’s ACS Climate Transition World Equity of late, which has dropped a few places to be supplanted by Lindsell Train Global Equity D. Baillie Gifford funds make a strong showing and, as you can see from Chart 3, active funds have the edge, with the only passive play in the top five being iShares Core MSCI World UCITS ETF GBP.

Source: Refinitiv Lipper


Second-placed Mixed Asset GBP Aggressive saw inflows of £827m, all but £59m being active money (see table below). Lastly, Equity Asia Pacific ex Japan flows of £651m were dominated by Veritas Asian GBP A (£488m), T. Rowe Asian Opportunities Equity C Inc S 1 (£219m), and Baillie Gifford Pacific A Acc (£208m).

Source: Refinitiv Lipper


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

Source: Refinitiv Lipper


The largest negative flows, like January, were from Money Market GBP (-£12.88bn) and is one third greater than inflows into all the classifications in positive territory combined (£9.03bn)

Equity UK and Equity Income UK are still in the doldrums, with outflows of £546m and £1.01bn, respectively. All of that and more is active money, with modest passive flows of £96m into Equity UK. However, their negative flows are for once eclipsed by Equity Europe ex UK, which shed £3.08bn, with active managers losing £3.23bn.


ESG Flows

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

Source: Refinitiv Lipper


As is the established pattern, equity funds see the biggest flows (£2.11bn). And—again an established pattern—non-ESG equity flows are in negative territory (-£4.89bn). However, unlike the past two months, positive ESG numbers aren’t enough to eclipse negative non-ESG ones.

Source: Refinitiv Lipper

With ACS Climate Transition World Equity X1 Acc GBP slipping into second place, February’s top equity ESG money taker is Baillie Gifford Positive Change B Acc. Baillie Gifford also takes third place, with Global Stewardship.

Source: Refinitiv Lipper


Lastly, newly launched BNY Mellon Sustainable Real Return B Acc takes the lion’s share of ESG mixed assets, at £461m. The share class was launched in February, although the fund itself has been running since June 2019.


Flows by Promoter

Chart 6: Largest Positive Flows by Promoter, February 2021 (£bn)

Source: Refinitiv Lipper


Volumes for the top two promoters—BlackRock and Vanguard—rebounded strongly in February, at £29.35bn and £19.15bn, respectively. Third-placed Baillie Gifford came in with only one-third of second placed Vanguard.

BlackRock’s top sellers were dominated by equity vehicles:

Source: Refinitiv Lipper

Meanwhile, Vanguard’s takings were more broad based.

Source: Refinitiv Lipper

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