December 20, 2022

Everything Flows 11/22: Risk Assets Rebound

by Dewi John.

Following October’s dash for cash, November rebounds hard as investors put their cash to work in more than £12bn of long-term assets.


Asset Class View

  • Equity funds netted £5.5bn, the largest inflow for the asset class since October 2020.
  • Mixed-assets funds saw the next largest influx, taking £4.1bn.

Active v Passive

  • Bond passive inflows were split almost exactly 50/50 between ETFs and mutual funds.
  • Equity ETFs attracted £501m, with their mutual fund passive equivalents netting £1.9bn.


  • Equity Global saw the largest inflows (£3.3bn), followed by Equity US (£2.7bn), both with a growth bias. All in all, November looked more like 2020 than 2022.
  • Equity UK is noticeable for not partaking in the rebound of risk assets, suffering £928m of outflows.

ESG Flows

  • Equity ESG funds enjoyed a strong rebound, netting £5.6bn, as their conventional equivalents suffered £128m of redemptions.
  • ESG funds overall were in the black by £10.4bn, while conventional funds saw outflows of £4bn, though this is skewed by £9.1bn of money market assets.

Asset Manager View

  • Coutts (£3.8bn, dominated by mixed assets) and Legal & General (£3.4bn) were the two largest-selling promoters.


Flows by Asset Class

Chart 1: Asset Class Flows, 36 Months, November 2022 (£bn)

Source: Refinitiv Lipper


“If winter comes, can spring be far behind?” wrote Percy Bysshe Shelly. Investors seem to have decided spring is already here, with large flows into risk assets in November. While we’ve seen nothing like the pension fund-driven money market inflows in October (£66.6bn), which broke all records, more than £6bn of that was redeemed, and £12.6bn deployed into risk assets.


Chart 2: Asset Class Flows, Active and Passive, November 2022 (£bn)

Source: Refinitiv Lipper


Only January this year saw positive flows for equities, albeit at a modest £23m. November, however, saw a strong rebound, with equity funds taking £5.5bn (split £3.6bn active to £1.9bn passive), the largest sum since October 2020.

Mixed-assets funds saw the next largest influx, netting £4.1bn, all within active strategies, as this is not a corner of the market where passive funds have made any inroads.

Bond vehicles took in £2.9bn, split between £1.2bn active and £1.7bn passive. We’ve seen strong shifts from active to passive in the fixed income space this year, so the positive showing is particularly noteworthy for the former.

Lastly, a quiet month for alternatives, with a small take of £80m—something of a relief for the asset class following two months of hefty outflows totalling more than £10bn, with much of the pain being taken by strategies investing primarily in asset-backed securities.



Chart 3: Passive Asset Class Flows, Mutual Funds v ETFs, November 2022 (£bn)

Source: Refinitiv Lipper


Bond passive inflows were split almost exactly 50/50 between ETFs and mutual funds. Meanwhile, equity ETFs attracted £501m, with their mutual fund passive equivalents netting £1.9bn.


Flows by Classification

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

Source: Refinitiv Lipper


After a poor patch, perennial favourite Equity Global has come back hard, attracting £3.3bn. The biggest winner was the Baillie Gifford Global Alpha Growth fund, with one share class taking £2.7bn. That’s all the more remarkable given the fund (and indeed the house) being a renowned growth manager. Yet here we are, with rates rising and growth being punished over the year. In contrast, it’s also interesting to see Equity Global Income—which has found popularity this year as a value-tilted global equity play, relegated to twenty-third place, up £122m over the month. Baillie Gifford also tops the table with second-placed Equity US, with its (also very growthy) American fund taking £2.7bn, which is a sliver more than the classification as a whole has taken in.


Source: Refinitiv Lipper


As you can see, BlackRock have also had a good month in both Global and US, with two and three share classes in the top five, respectively.



Source: Refinitiv Lipper


This does rather beg the question as to what’s driving these flows? Are investors calling the bottom of the market and peak rates, or (to continue with my creaky seasonal metaphor) is this simply a case of one swallow not making a spring, and this is just a case of investors bringing portfolios back into line after what was, after all, a very unusual October? December, for sure, will be interesting.


Chart 5: Largest Negative Flows by Refinitiv Lipper Global Classification, November 2022 (£bn)

Source: Refinitiv Lipper


Some £6.3bn exited Money Market GBP funds. The most surprising (but not really) element of November’s redemptions is Equity UK, with outflows of £928m, plus a further £297 from Equity UK Income. Surprising, because it’s the domestic flavour of the asset class with the biggest inflows. Unsurprising because…well, this always happens. Nobody loves UK equities—least of all UK investors.


ESG Flows

Chart 6: ESG Asset Class Flows, November 2022 (£bn)

Source: Refinitiv Lipper


We’ve noted in previous reports that ESG equities had suffered delayed, but incrementally larger, collateral damage from the outflows from equities throughout the year, with their ESG equivalents going into the red in Q3. This has, again, turned on a farthing in November, with ESG funds taking all and more of the equity inflows for the month, as their conventional equivalents saw outflows of £127m.


Source: Refinitiv Lipper


It’s also interesting to see that ESG funds took the majority of bond cash this month, with £1.8bn of the £3bn total. We’ve previously speculated that the outflows from ESG bond funds may be more due to them being predominantly actively managed in a market where passives are taking all the assets.


Source: Refinitiv Lipper


Finally, ESG only scraped £83m from the £4bn-plus intake of mixed asset funds this month, which is quite unusual for this corner of the market.


Flows by Promoter

Chart 7: Largest Positive Flows by Promoter, November 2022 (£bn)

Source: Refinitiv Lipper


The answer to why mixed asset ESG fared relatively poorly (above) is to be found in who dominated the flows in November, with Coutts seeing large inflows into its mixed-assets funds, attracting £3.9bn over the month as a whole.


Source: Refinitiv Lipper


Legal & General was second, netting £3.4bn, with strong takings for money market and bond vehicles.


Source: Refinitiv Lipper

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