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February 20, 2024

Everything Flows, Jan ’24: Animal Spirits in Winter Hibernation

by Dewi John.

Asset class view

  • Money market funds are in the black or the fourth straight month, netting £1.11bn in January.
  • Mixed-assets funds saw the strongest outflows, shedding £1.17bn.

Active v passive

  • Active funds suffered redemptions of £2.57bn, excluding money market funds (MMFs).
  • Active equity and bond flows were negative (-£944m and -£290m, respectively) and passives positive (£742m and £1.36bn).


  • Equity Global had the highest inflows (£1.13bn), with £935m of this being captured by passive funds.
  • UK equities continued their negative run, losing a collective £1.59bn over the course of the month.

Sustainable fund flows

  • Sustainable funds took £903m (£981m ex MMFs).
  • Sustainable bonds proved most popular, netting £610m—more than half of the flows to bonds as a whole.

Asset manager view

  • BlackRock was the only asset manager to attract more than £1bn in January, netting £5.59bn.

Flows by Asset Class

Three-year flows

Chart 1: Asset Class Flows, 36 Months, to January 2024 (£bn)

Source: LSEG Lipper


Like the headline says, the animal spirits of the market are in deep slumber, with little movement one way or another across asset classes. Given the poor macro news as we edge into the new year, we should perhaps be thankful for small mercies. One thing of note, is that MMFs are in the black or the fourth straight month, following a lengthy period from Q4 2022, when cash flowed out of this asset class as the massive influx in October 2022, which put the UK market out of sync with its developed market peers. Normal service now seems to have resumed.

Despite the persistent macro worries of Japan, FTSE Japan was the best performing developed index for the month, with the S&P and FTSE All World in positive territory in sterling terms. Europe dragged itself out of a mid-month pit to edge into positive territory by month end, as the FTSE 100 and Emerging Markets stayed in negative territory over the month. Meanwhile, the yield on the 10-year gilt edged up to a high of just above 4% before heading to 3.75% by month end.

December’s optimism, with equities nudging into positive territory for the first time since May, was not sustained.


Active versus Passive

Chart 2: Asset Class Flows, Active and Passive, January 2024 (£bn)

Source: LSEG Lipper


Overall, MMFs saw the largest inflows, netting £1.11bn, followed by bond funds, at £1.07bn. However, it’s clear from the chart above that this is a tail of two strategies, as passive bond funds took £1.36bn, as their active peers shed £290bn over the course of the month. Indeed, this continues last year’s embedded trend, where active bond funds suffered redemptions of £7.61bn, while their passive mutual fund equivalents took £11.64bn and ETFs £6.53bn.

Meanwhile, mixed-assets funds saw the heaviest redemptions, at £1.18bn, although more than £900m of this was due to the liquidation of one single share class.

And, while equity funds lost £202m in aggregate, this breaks down to a £944m active redemption, while passives took £742m. Real estate remained out of fashion, with outflows of £199m.


ETFs and Passive Mutual Funds

Chart 3: Passive Asset Class Flows, Mutual Funds v ETFs, January 2024 (£bn)

Source: LSEG Lipper


A little more action for ETFs in January, as in December the above chart was largely blue. As is clear from chart 2, it’s a popular month for passives (no big news there), but ETFs have taken a larger share of the pie, at £809m, mutual funds; £552m ETFs for bonds, and for equities, £452m and £290m, respectively.

In total, passives took £2.16bn, split £1.3bn to mutual funds and £855bn to ETFs.


Flows by Classification

Largest inflows

Chart 4: Largest Positive Flows by LSEG Lipper Global Classification, January 2024 (£bn)

Source: LSEG Lipper


It’s unusual to see another asset classification take the top spot when MMFs overall are the most popular asset class. Nevertheless, Equity Global saw £1.13bn of inflows, with £935m of this being captured by passive funds.


Source: LSEG Lipper


Money Market GBP comes in at second, netting £1.06bn. Bond Global USD and LC collectively took £1.18bn, again, both largely to collective strategies. Mixed Asset GBP Aggressive continues to buck the negative trend from the asset class as a whole, and scooped up £525m.

Source: LSEG Lipper


Meanwhile, Equity US bucked the active-to-passive trend this month, as active managers took £873m while passive funds lost £450m. Alternative Credit Focus saw inflows of £277m. As the name suggests, this isn’t a single strategy, but encompasses a number of approaches. However, over the past couple of years, the strongest positive and negative flows have tended to be into ABS-focused funds, and this is the case, and as such my pet thesis is that flows here tend to work as a surrogate for confidence in the strength in the economy. Given the negative mood music of February, that will be tested to the downside.


Largest Outflows

Chart 5: Largest Outflows by LSEG Lipper Global Classification, January 2024 (£bn)

Source: LSEG Lipper


As indicated in the commentary under chart 2, the majority of the £1.3bn redemptions from Mixed Asset GBP Balanced is down to the liquidation of one share class. Nevertheless, the overall trend for this classification, alongside its Conservative equivalent (-£180m) is into the red, in contrast to its Aggressive sibling, which heads ever upwards. As we’ve previously speculated, the former could be due to investors shedding more bond-heavy MA funds, which they had used as bond proxies when yields were lean, and going for pure fixed income plays, a trend that equity-heavy Aggressive funds are not a part.

UK equities continue their long-run negative run, losing a collective £1.59bn over the course of the month.

Lastly, we see some profit-taking from Equity Japan, with redemptions of £167m, ahead of more recent negative macro newsflow from the country. In the long run, my scepticism may play out, but 2023 was nevertheless a good time to be invested. And, as Keynes is reputed to have said, in the long term we’re all dead.


Sustainable Fund Flows

Chart 6: Sustainable Asset Class Flows, January 2024 (£bn)

Source: LSEG Lipper


January represents a return to positive territory for sustainable funds, following a flat December. Overall, sustainable funds took £903m (£981m ex MMFs). Sustainable bonds proved most popular, netting £610m—more than half of the flows to the asset class as a whole. Sustainable bond flows have historically been well behind their equity equivalents, and greater product provision combined with stronger flows to the asset class overall, seem to be remedying this. As can be seen from the table below, Bond Global Corporates funds are taking the lion’s share of this.


Source: LSEG Lipper


Sustainable equity flows bucked the trend for the asset class overall, attracting £451m—again, with the bulk going to Global funds, as indicated by the table below.


Source: LSEG 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, January 2024 (£bn)

Source: LSEG Lipper


BlackRock was the only asset manager to attract more than £1bn in January, with £5.59bn. Some £2.9bn went to equity funds, with the other positive asset class flows going to MMF, which took £2.11bn. Bonds and mixed-assets took £477m and £172m, respectively.


Source: LSEG Lipper


HSBC came second, with £764m, as MMFs took £362m, equities £279m and mixed-assets £98m.


Source: LSEG Lipper


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