January 21, 2022

Everything Flows, December 2021: Active and ESG Equity Dominate

by Dewi John.

While money market sales net the largest by asset class, ESG equities take almost £4bn.


Asset Class View

  • Equity funds shed £490m, although domestic and global markets rose over the month.
  • Money market funds were the biggest overall money takers (£2.2bn), followed by mixed assets (£1.95bn).

Active v Passive

  • All and more of the negative equity flows were from passives (-£19bn), with active funds netting £1.4bn.
  • Passive equity outflows were split evenly between ETFs and mutual funds, and passive bond mutual funds attracted £602m while their ETF peers lost £406m.


  • The top three classifications were Money Market GBP (£2.3bn), Equity Global (£1.2bn), and Mixed Asset GBP Aggressive, repeating November’s pattern.
  • The largest outflows were from Equity UK, Equity UK Income, and Equity UK Small and Mid-Cap, which shed about £2.5bn between them.

ESG Flows

  • ESG equity funds attracted almost £4bn of assets, with their non-ESG equivalents experiencing outflows of £4.5bn.

Asset Manager View

  • Aviva and Abrdn led the table in December, selling about £4bn of money market funds between them.


Flows by Asset Class

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

Source: Refinitiv Lipper


While December saw gains for UK and global equities, reviving after November’s falls, equity funds saw net outflows for the month. Meanwhile, despite growing inflation—and growing concerns about it accelerating further—bonds did rather well over the final month of 2021.

More specifically, those asset classes seeing positive net flows in December were: money market (£2.24bn), mixed-assets (£1.95bn), bond (£1.17bn), and alternatives (£181m). On the other hand, equities (-£490m), commodities (-£138m), and real estate (-£6m) saw outflows over the month. It’s the third consecutive month where money market funds have taken the most, albeit down from November’s gargantuan £11.1bn inflows.

The net equity fund outflows mask the fact that active funds attracted £1.39bn, with their passive peers shedding £1.89bn.


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

Source: Refinitiv Lipper


Passive equity outflows have been divided more or less 50-50 between ETFs and mutual funds. However, the net effect was similar to November’s passive equity outflows, at -£1.88bn. In contrast, fixed income ETFs saw outflows of £406m, while their passive mutual fund peers attracted £602m. What little action there is in commodity and alternatives passives went, as is usual, almost exclusively to mutual funds.


Flows by Classification

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

Source: Refinitiv Lipper


In ranking terms, December looks remarkably like November, with Money Market GBP, Equity Global, and Mixed-Asset GBP Aggressive taking the top three places. There’s clearly considerable rotation around money market funds this month, as total flows are £2.29bn, while the top two funds have taken about £700m more than that between them, with Aviva leading the pack.


Source: Refinitiv Lipper

However, unlike November, it’s active funds that have dominated the Equity Global take. Oddly, perhaps, one fund share class has taken the overwhelming bulk of this: the L&G Global Developed Four Factor Index J GBP H Acc (£1.13bn), and this is a passive fund. Its benchmark is comprised of shares in large- and middle-capitalisation companies globally, based on four risk factors: value, low volatility, momentum, and quality. So, if you remove this (a highly speculative “if”, admittedly) then the negative flows for passive equity would be considerably larger.


Source: Refinitiv Lipper

Another commonality with November’s data is that all the top five are ethical funds.


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

Source: Refinitiv Lipper


Investors have dumped UK equities with a vengeance this month, be they large-, mid-, small-cap or income. The three bottom classifications shed more than £2.5bn between them over December. Equity US has also continued its unpopularity from last month, which has been at variance with its general popularity over the year, though only seeing outflows of £244m, as opposed to almost £2bn in November. Almost all of this has been from passive vehicles.

Another thing that’s apparent from the data this month is that investors have been buying hard currency emerging market debt (£337M) while selling its local currency equivalents (-£286m)


ESG Flows

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

Source: Refinitiv Lipper


The net outflows from equity funds as a whole have concealed a significant rotation from non-ESG to ESG, just as they did from passive to active (see p3). ESG equity funds took in £3.96bn, while their non-ESG equivalents lost £4.45bn. This trend repeats each month, and now seems pretty much par for the course, although top money takers can change significantly from month to month. This month, the leader is the L&G Global Developed Four Factor Index J GBP H Acc, just as it was the main money taker in Equity Global the next share class, Royal London UK Broad Equity Tilt R Acc, takes a little more than half that.

What is noteworthy, however, is that despite the overall unpopularity of UK equity funds, this and the following share class, Royal London Sustainable Leaders Trust B Inc, are Equity UK classifications.


Source: Refinitiv Lipper

The asset class seeing the next largest ESG inflows is mixed-assets, with a more modest take of £789m. Those multi-asset funds share classes themselves have seen no dramatic winners this month, with Mercer Diversified Growth Fund M12 GBP Hedged netting the largest amount, at £62m.

Source: Refinitiv Lipper


Flows by Promoter

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

Source: Refinitiv Lipper


Aviva Investors sold £1.98bn of funds in December, with flows money market funds leading the charge at £2.21bn—unsurprising, given the asset class’ end-of-year domination. The manager also saw bond inflows of £172m.

Source: Refinitiv Lipper


What Abrdn misses on vowels it made up for in money market fund sales, which made up £1.84bn of its £1.66bn of sales for December. This was the asset managers only asset class net inflows for the month.

Source: Refinitiv Lipper

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