May 19, 2021

April Goes Risk-on, with Global Equity and EM up and Money Market Funds Negative

by Dewi John.

Equity, bond, and mixed-assets fund flows are all positive, with the biggest losses coming from money market vehicles.


Asset Class View

  • Investors funded allocations to equities (£4.34bn), mixed-assets (£2.3bn), and bond funds (£1.75bn), with net outflows from money market funds (-£7.21bn),

Active v Passive

  • Passive funds took the most bond cash, and more than half of equity flows (£2.55bn). Nevertheless, April was a better month for active managers, moving into positive territory from March’s negative flows.
  • Equity ETFs netted just £137m out of a total of £4.26bn for passive equity. Bond ETFs did rather better, with £452m of the £1.69bn passive total.


  • Equity Global is the most successful asset gatherer once more (£2.32bn). Active strategies are out in front, taking £1.87bn of the total.
  • Demonstrating the risk-on nature of the month, Equity Emerging Markets Global attracted £1.19bn.
  • Despite all the talk of inflation, this has yet to be reflected in flows—there hasn’t been a rush for the exits in bonds.

ESG Flows

  • Equity products led, with positive flows of £3.26bn, and BlackRock vehicles taking the top three places.

Asset Manager View

  • Vanguard was the top promoter by flows, netting £287bn, followed by Royal London and DWS.


Flows by Asset Class

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

Source: Refinitiv Lipper


A livelier month than last: flows by asset class went from about negative £7bn to £4.5bn. In March, it was from broadly negative £4bn to £2bn. Investors moved cash out of money market funds (-£7.21bn), with equities (£4.34bn), mixed-assets (£2.3bn), and bond funds (£1.75bn) being the main beneficiaries. Passives took nearly all of the bond flows, and more than half of that netted by equities (£2.55bn). That said, April has been a better month for active managers in these asset classes, as they were in negative territory in March. On the other hand, true to form, positive mixed-asset flows all went to active managers.

Lastly, while there’s increasing talk of a new commodity supercycle, no one seems to have told UK investors, as fund sales for the asset class have barely moved the dial (£1m).


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

Source: Refinitiv Lipper


What’s notable with this month’s passive flows is how small a bite equity ETFs have taken: only £137m out of a passive equity total of £4.26bn. That’s a very different trend from what we’ve seen in previous months, with equity ETFs taking 39% of passive flows in March, and I suspect no more than a blip—but we shall see. Bond ETFs did rather better, with £452m of the £1.69bn passive total.

The biggest passive money taker this month was the mutual fund, Royal London Emerging Markets ESG Leaders Equity Tracker R Acc, which took in £709m.


Flows by Classification

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

Source: Refinitiv Lipper


As has been the case throughout this year, Equity Global is the most successful asset gatherer, albeit with more muted flows than March (£2.32bn versus £3.98bn). However, the previous month, there were net outflows from passive strategies. This time, active is out in front, taking £1.87bn of the total. Two front runners are the fresh-out-of-the-box ACS World ESG Insights Equity X1 Acc GBP and Baillie Gifford Global Alpha Paris-Aligned B Acc, both launched in April (see table below).

Source: Refinitiv Lipper


Baillie Gifford also makes an appearance at the top of the second-best seller this month, Mixed Asset GBP Aggressive, with its Managed A (£328m). Although the Lipper Global Classification took £1.45bn, only this and the Vanguard LifeStrategy 80% Equity Acc netted more than £100m.


Source: Refinitiv Lipper

Turning our attentions to third-placed Equity Emerging Markets Global, and passives dominate. Four out of the top-selling share classes are trackers, and three of the five are ESG vehicles. Interestingly, fourth-placed TM RWC Global Emerging Markets GBP S Acc is also a new launch.


Source: Refinitiv Lipper


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

Source: Refinitiv Lipper


April seems something of a risk-on month, with money going into global and emerging market equities, and out of money market funds. It’s also been another negative month for Equity Europe ex UK, with outflows of £937m—about double that of the previous month.

Two things to note from this: looking at all the blue on the chart above, it’s largely been allocations away from active strategies at the bottom of the table. The second, perhaps not as obvious, is that despite all the talk of inflation threatening bond portfolios, this has yet to be reflected in flows—there hasn’t been a rush for the exits in fixed income sectors.


ESG Flows

Chart 5: ESG Asset Class Flows, April 2021 (£bn)

Source: Refinitiv Lipper


A familiar pattern in ESG asset gathering, with equity products way out in front, with positive flows of £3.26bn (compared to £6.5bn and £2.11bn for March and February, respectively). BlackRock vehicles take the top three places, with Brown Advisory US Sustainable Growth Fund Sterling Class, which invests predominantly in US large caps at fourth.


Source: Refinitiv Lipper

Eight out of the top-10 mixed-assets money takers this month are from the Royal London or Liontrust stables. One of the other two is fund of funds SUTL Cazenove Charity Responsible Multi-Asset S Inc.


Source: Refinitiv Lipper


Flows by Promoter

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

Source: Refinitiv Lipper


While it’s been a typically dominant month for Vanguard, Royal London and DWS have elbowed competitors aside to take second and third places. Aside from the passive emerging market equity fund in the top slot, it’s money market funds that are the heaviest money takers for Royal London. Equities (£815m) and money market (£609m) were the top selling asset classes.

Source: Refinitiv Lipper


Meanwhile, DWS’ flows were dominated by one fund—the money market Deutsche Managed Sterling Advisory.

Source: Refinitiv Lipper


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