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Chart 1: Asset Class Flows, Active and Passive, May 2021 (£bn)
Source: Refinitiv Lipper
Something of a volte face from the decidedly risk-on April, as investors dump equities (-£1.29bn) and head for the relative security of money markets (£2.68bn) and bonds (£2.7bn). Nevertheless, mixed assets still took £1.67bn, with the most popular segment of this being aggressive (the highest equity content—see below).
Bonds’ positive take was split between £1.67bn for passive and £1.03bn for active managers, whereas the negative flows for equity were £323m and £924m, respectively.
Lastly, money continues to drip out from real estate, at -£129m for the month.
Chart 2: Passive Asset Class Flows, Mutual Funds v ETFs, May 2021 (£bn)
Source: Refinitiv Lipper
After a lacklustre April, when passive mutual funds edged them out of the picture, ETFs are back in the mix in May. They took in £716m of the £1.67bn of passive bond flows, respectively, and held on to a wafer-thin £21m of positive equity flows as equity passives shed £344m in total.
Chart 3: Largest Positive Flows by Refinitiv Lipper Global Classification, May 2021 (£bn)
Source: Refinitiv Lipper
It’s noticeable that the largest inflows have gone to active managers—par for the course in money market and mixed asset, as this strategy is overwhelmingly dominant in these asset classes.
For the first time this year, Equity Global is absent from the top spot, shedding £26m. This figure conceals a rotation of £449m out of passive funds and £423m into active. Instead, markets go risk-off with a £2.75bn allocation to Money Market GBP. A broad range of providers have participated in this, although Insight leads the pack, which has also helped it in the provider rankings, below.
Mixed Asset GBP Aggressive weighed in second (as it did in April), with net flows of £966m, and GBP Balanced at fourth, with £762m.
Source: Refinitiv Lipper
Bond GBP Short Term took £792m. These are funds investing in the one- to three-year segment of the sterling yield curve. Allocations here normally indicate reallocations out of cash in search of higher yield, or from longer-dated bonds in response to concerns around the asset class in general. While we can’t tell where the money has come from, given the circumstances, I’d say the latter is more likely.
Source: Refinitiv Lipper
Chart 4: Largest Negative Flows by Refinitiv Lipper Global Classification, May 2021 (£bn)
Source: Refinitiv Lipper
The first thing of note is, as with inflows, the outflow chart is mainly blue, indicating most of the action has been with active managers. Confirming the off-risk nature of May, Equity US (-£777m), Equity UK (-£729m), and Equity Europe ex-UK (-£479m) have seen the largest negative flows. Indeed, eight out of 10 of the largest outflows have been from equity Lipper Global Classifications. Next comes Bond GBP (-£369m), indicating that some investors at least are shifting to the shorter end of the yield curve in anticipation of more volatile times for the asset class.
Equity Emerging Markets Global reverses April’s positive flows, losing £337m. While that masks £167m of positive flows to active managers, the biggest money taker for this Lipper Global Classification is the Royal London Emerging Markets ESG Leaders Equity Tracker R Acc (£616m).
Chart 5: ESG Asset Class Flows, May 2021 (£bn)
Source: Refinitiv Lipper
Despite negative equity flows this month, the asset class’ sustainable flows remained positive to the tune of £594m. But, unusually, ESG money market funds are out in front, netting £1.56bn. When the asset class sees strong positive flows, ESG vehicles are peripheral, so it will be interesting to see if this is the start of a distinct trend, as with other asset classes.
Source: Refinitiv Lipper
Turning to equities, it’s again been a bit of an unusual month, with ESG seeing inflows of £594m despite the asset class overall being in negative territory. That’s not the unusual part, which is that ESG equity flows are normally dominated by diversified global funds, or those following developed markets. Here, despite the significant outflows for emerging markets in general, the largest money taker is the Royal London Emerging Markets ESG Leaders Equity Tracker R Acc (£616m).
Lastly, we take a rare look at bonds. Although they’re fourth-placed behind mixed asset, the gap is a narrow one than normal (£466m versus £403m). Global funds dominate flows in this instance.
Source: Refinitiv Lipper
Chart 6: Largest Positive Flows by Promoter, May 2021 (£bn)
Source: Refinitiv Lipper
BlackRock leads the pack again, taking £1.99bn over the month, and leading with a trio of money market share classes, two from the BlackRock ICS GBP Liquid Environmentally Aware Agency GBP, together attracting £1.16bn.
Source: Refinitiv Lipper
Insight’s capture of second place is noteworthy, not least for the presence of an alternatives fund—Insight High Grade ABS S—the objective of which is to produce an interest rate-based return by investing primarily in asset-backed securities and floating rate notes.