June 17, 2021

Everything Flows: Equities Sell in May, as Markets Go off-Risk

by Dewi John.

The previous month’s on-risk sentiment reverses, with eight out of 10 largest outflows coming from equity classifications.


Asset Class View

  • Money market and bond funds took the most money in May (£2.7bn and £2.68bn, respectively), with equities shedding £1.29bn.

Active v Passive

  • Passive bond funds attracted most of the cash going into the asset class—£1.67bn out of the total—while passive equities lost £323m compared to a £964m loss for active strategies.
  • ETFs netted £716m of the £1.67bn of passive bond flows, and £21m of positive equity flows, compared to outflows of £344m for equity passives overall.


  • Bond GBP Short Term’s attraction of £792m, combined with outflows from Bond GBP, indicate a growing risk-aversion among bond investors.
  • Money Market GBP took the most money (£2.75bn), followed by Mixed Asset GBP Aggressive (£966m).
  • The largest outflows were from Equity US (-£777m), Equity UK (-£729m), and Equity Europe ex-UK (-£479m). Emerging markets also saw a reversal of April’s strong positive showing.

ESG Flows

  • All asset classes experienced positive ESG flows for the month, with money markets leading the way—unusual for the asset class—even when it dominates flows overall.

Asset Manager View

  • BlackRock leads, with net flows of £1.99bn—spearheaded by three money market funds—followed by Insight, with a mixture on money market, alternatives, and bonds.


Flows by Asset Class

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.


Flows by Classification

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.


Source: Refinitiv Lipper


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).


ESG Flows

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


Flows by Promoter

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.


Get In Touch


Related Reports

Passive equity and bond funds took money, while their active equivalents saw ...

A number of market observers, including myself, have stated that ETFs have written a true ...

Are UK investors betting on the sustained return of inflation? The UK Consumer Price ...

Tracking Error, Cost, Sector Ranking, and ESG Exposure: What the IA’s Passive ETF ...

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