April 19, 2022

Everything Flows: Major Bond and Equity Redemptions in March

by Dewi John.

Actively managed vehicles saw the greatest outflows in March, with money market and mixed-assets funds seeing net inflows.


Asset Class View

  • Money market funds attracted £4.8bn and mixed-assets funds £1.3bn during March.
  • Net outflows excluding money market funds were £3.6bn, with equities shedding £2.4bn and bonds £2bn.

Active v Passive

  • Flows were dominated by active money over the month (up a net £1.1bn), as opposed to £137m for passives.
  • Alternative and bond passive mutual funds netted £115m and £602m, respectively, with ETFs taking the brunt of negative passive flows.


  • While Money Market GBP took £4.8bn, the second most popular was Equity Emerging Markets Global, with £910m, split £642m passive/£268m active.
  • Equity Europe ex-UK saw the largest redemptions (-£927m), and Bond GBP Short Term shed £924m, with Bond USD Inflation Linked also seeing significant outflows.

ESG Flows

  • All ESG asset classes except alternatives made net gains, the main beneficiary being money market funds (£3.7bn).
  • Equity (£2bn/-£4.4bn), bond (£404m/-£2.4bn), and real estate (£76m/-£356) saw ESG assets in the black (ESG/non-ESG).

Asset Manager View

  • BlackRock was the top-selling fund manager, followed by Vanguard.



Flows by Asset Class

Chart 1: Asset Class Flows, Active and Passive, March 2022 (£bn)

Source: Refinitiv Lipper


March was, of course, a risk-on month, as net flows excluding money market funds run to -£3.6bn. Everything except money market (£4.8bn) and mixed-assets funds (£1.3bn) sold off, reversing the large negative money market flows in February. The largest negative moves were equity (-£2.4bn) and bond (-£2bn). Real estate (-£281m), alternatives (-£189m), and commodity (-£19m) all saw negative, if relatively modest, flows.

Despite this, the FTSE 100 and S&P 500 both made gains over the month, and the yield on the benchmark 10-year UK gilt actually rose, the latter likely reflecting inflationary concerns over war-induced rising risk aversion.

As can be seen from chart 1, above, flows were dominated by active money, as alternatives (£116m) and bonds (£278m) experienced passive positive flows, albeit masked by overall negative ones.



Chart 2: Passive Asset Class Flows, Mutual Funds v ETFs, March 2022 (£bn)

Source: Refinitiv Lipper


A relatively good month for alternative and bond passive mutual funds, which netted £115m and £602m, respectively. Two Vanguard share classes alone—Vanguard Global Bond Index GBP Hedged Acc and Vanguard Global Corporate Bond Index GBP Hgd Dist—took £557m of the latter. Meanwhile, bond and equity ETFs shed £324m and £194m, respectively.



Flows by Classification

Chart 3: Largest Positive Flows by Refinitiv Lipper Global Classification, March 2022 (£bn)

Source: Refinitiv Lipper


Given the top-selling asset class for the month, it’s inevitable that the top-selling classification was Money Market GBP, attracting £4.8bn. The top-selling fund share class, BlackRock ICS Sterling Liq Admin IV Acc, alone saw inflows of £3.4bn.


Source: Refinitiv Lipper


What’s less intuitive, given the febrile macro background, is the second most popular classification was Equity Emerging Markets Global, which saw flows of £910m, split £642m passive to £268m active, reflected in the fact that three of the classification’s top-five sellers are passives, from iShares and Vanguard. February, too, was a strong month for this classification.

Source: Refinitiv Lipper


Meanwhile, with multi-asset enjoying a good month, Mixed Asset GBP Aggressive and Balanced funds took in £878m and £679m, respectively. It’s also been a good month for dollar-denominated fixed income, with Bond Global Corporates USD and Bond Global USD together taking £868m.

Lastly, it has been a rare positive month for Equity UK, with inflows of £426m. This masks positive flows of £774m for passive funds, and outflows of £347m for active. After years of post-GFC underperformance, recent UK equity returns have been relatively strong, as we examine here. While one swallow does not make a spring, this may be a recognition by investors that there’s money to be made at home as well as abroad.


Chart 4: Largest Negative Flows by Refinitiv Lipper Global Classification, March 2022 (£bn)

Source: Refinitiv Lipper


Equity Europe ex-UK saw the largest outflows, at -£927m, with almost all of this coming from active funds. At only £3m behind, Bond GBP Short Term saw £947m of actively managed money head out of the door. Given the Bank of England has hiked base rates by 65 basis points over the previous four months, one might expect to see this from longer-dated bond funds. Likewise, the £292m redemptions from Bond USD Inflation Linked is a tad counterintuitive.

Year to date, small cap equity returns have taken a bit of a hammering, and this is reflected in the combined £1.2bn outflows from US and UK small- and mid-cap funds.



ESG Flows

Chart 5: ESG Asset Class Flows, March 2022 (£bn)

Source: Refinitiv Lipper


With the exception of alternatives, all ESG asset classes saw the tide flow in their favour over the month, with the main beneficiary being money market funds, at £3.7bn. That outstrips the gains to non-ESG funds for the asset class, which were £1.2bn—something which is a rare occurrence in this area.


Source: Refinitiv Lipper


Meanwhile, equity (£2bn/-£4.4bn), bond (£404m/-£2.4bn), and real estate (£76m/-£356) all saw ESG funds in the black while their non-ESG peers were in the red. Only with mixed asset funds did non-ESG funds prove more popular than their ethical equivalents.


Source: Refinitiv Lipper



Flows by Promoter

Chart 6: Largest Positive Flows by Promoter, March 2022 (£bn)

Source: Refinitiv Lipper


BlackRock (£2.4bn), Vanguard (£1.9bn), and Goldman Sachs (£1.8bn) were the top sellers in March.

BlackRock’s net positive flows were attributable to money market funds, which took £3.4bn over the month.


Source: Refinitiv Lipper


Despite not benefitting from money market flows in a month dominated by the asset class, Vanguard still made a strong showing, with top share class sales being distributed between bond and equity vehicles. The manager netted £809m, bonds; £680, equity; and £444m to mixed-assets.


Source: Refinitiv Lipper

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