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April 25, 2023

Everything Flows: Risk Assets in Black Despite Banking Turmoil

by Dewi John.

While money market funds saw the largest inflows, this was equalled by the combined flows to risk assets.

Asset Class View

  • Money market funds saw the greatest inflows (£3.4bn), the first time this asset class has been in positive territory since the surge last October.
  • Equity funds took almost £2bn—the first time in the black this year.

Active v Passive

  • Long-term active funds took £745m, while their passive equivalents netted £2.7bn.
  • ETFs attracted £651m, largely to fixed income, while passive mutual funds saw inflows of £2.7bn, mainly equity.


  • The top money-taking classifications in March were Money Market GBP (£3.4bn), and Equity Global (£1.8bn).
  • Some £1.72m was redeemed from the three main UK equity classifications.

Sustainable Fund Flows

  • Sustainable equity attracted £1.57bn, taking the lion’s share of equity flows.
  • Sustainable bonds and mixed-assets funds saw redemptions of £63m and £59m, respectively.

Asset Manager View

  • BlackRock attracted half as much again as the next 10 money takers, pulling in almost £10bn.


Flows by Asset Class

Chart 1: Asset Class Flows, 36 Months, to March 2023 (£bn)

Source: Refinitiv Lipper


In March, investors digested various banking crises—regional banks in the US and the demise-cum-salvaging of Credit Suisse. Unsurprisingly, equity indices took a dive, then began the climb back from mid-month once it became clear that this was unlikely to snowball into something posing systemic dangers. Similarly, yields on the 10-year gilt slipped from 3.85% to 3.3% by 17 March.

Despite the turmoil with financials, equity funds were in positive territory for the first time since December, with funds excluding money market vehicles attracting £3.41bn of assets.


Chart 2: Asset Class Flows, Active and Passive, March 2023 (£bn)

Source: Refinitiv Lipper


Equity markets took a walloping in March, but indices rebounded and equity funds came out surprisingly strongly over the month, netting £1.93bn, albeit with a relatively modest £211m of redemptions from their active versions. Mixed-assets funds also had a positive month, taking £1.14bn, and bonds £662m. Passives continue to dominate flows to the latter, taking in £582m.

It’s a little unusual to see strong flows to money market funds when risk assets are in positive territory—especially as so much is still squirreled away in the aftermath of September’s mini-budget—but the asset class surprised this month, taking £3.41bn, the first positive month since October.

It wasn’t such a good month for either alternatives (-£235m) or real estate (-£110).



Chart 3: Passive Asset Class Flows, Mutual Funds v ETFs, March 2023 (£bn)

Source: Refinitiv Lipper


This month, it’s clear that passive bond investors love ETFs (£508m) and their equity peers have piled into mutual funds (£2.09bn). The top five ETFs were all iShares vehicles, but spanning high-yield, global corporates and govvies, gilts, and fallen angels. Meanwhile, there was a similar diversity of themes at play in the equity space, from emerging markets to North America, albeit with a broader variety of providers.


Flows by Classification

Chart 4: Largest Positive Flows by Refinitiv Lipper Global Classification, March 2023 (£bn)

Source: Refinitiv Lipper


Despite trailing money market GBP funds, Equity Global saw more inflows than it did in February, when it was the top money taker, attracting £935m. In March, though lagging Money Market GBP’s £3.4bn, it took in £1.8bn. Emerging Markets Global funds attracted a respectable £1.26bn, with all but £218m of this going into passive funds.


Source: Refinitiv Lipper


There’s some interesting action in the fixed income space: Bond Corporates GBP had another decent month overall, with £578m going mainly to index trackers.

In February we noted that there had been a slight dipping of toes into high yield, with a little less than £180m going into global HY (GBP and USD) and USD. Bond Global High Yield USD saw inflows of £367m in March, and GBP £119m, so it does indeed look like there’s an uptick in interest in this area of the market.

Bond GBP Short Term saw inflows of £265m, as some investors seek to insulate their fixed income portfolios against rising rates.


Source: Refinitiv Lipper



Chart 5: Largest Negative Flows by Refinitiv Lipper Global Classification, March 2023 (£bn)

Source: Refinitiv Lipper


In March, £1.72bn was redeemed from the three main UK equity classifications, with £1.32bn of this being from active strategies. We’ve noted before that this isn’t being driven by performance, as was arguably the case during the glory days of the growth rally, when it seemed that the sun would never set on the tech leviathans of the S&P 500. The UK has stood up pretty well since the tail end of 2020, but investors have yet to return to the fold. This is driven by two factors—pension funds’ lust for fixed income, and UK retail redressing its historic domestic overweight. With both of these, however, you have to wonder “are we there yet?”, though each month the answer comes back in the negative.

Bond Global GBP (-£628m) and Bond GBP Government (-£216m) have gone into redemption mode following a positive February.



Sustainable Fund Flows

Chart 6: Sustainable Asset Class Flows, March 2023 (£bn)

Source: Refinitiv Lipper


Sustainable equity attracted £1.57bn, taking the lion’s share of the £1.93bn for the month. As you can tell from the table below, there’s a fair degree of crossover in the positive flows for Equity Global and the return to favour of sustainable equity funds.


Source: Refinitiv Lipper


Other than £201m to money market and £6m into real estate, no other asset classes saw positive flows, with bonds and mixed-assets funds seeing redemptions of £63m and £59m, respectively. Even those mixed-assets funds that did take money over the month didn’t take much. It’s an interesting turnaround from 2021, where sustainable funds were taking a large cut of the mixed asset pie. Why this should be is far from clear, but we’ll likely have a dig into this over the coming weeks to see if there are discernible drivers or if it’s something to file under “just one of those things”.


Source: Refinitiv Lipper


The Sustainable Fund Flows section has a narrower and stricter focus than those which indicate some form of ESG strategy in their fund documentation—to a smaller group of sustainable funds, defined as all SFDR Article 9 funds plus all Lipper Responsible Investment Attribute funds reduced to those containing indicative sustainable keywords in the fund name.


Flows by Promoter

Chart 7: Largest Positive Flows by Promoter, March 2023 (£bn)

Source: Refinitiv Lipper


BlackRock, as is so often the case, ruled the roost in March, netting £9.81bn, £6.28bn of which went into money market funds, with the rest split between equity (£1.91bn), mixed-assets (£978m), and bond (£645m).


Source: Refinitiv Lipper


As you can see from the chart, the rest lagged considerably, as the other nine companies in the top 10 saw inflows of £6.63bn, with HSBC second-placed with £1.31bn.


Source: Refinitiv Lipper

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