Headline figures
Assets Under Management[1]
Chart 1: Assets Under Management of ETFs Listed on the LSE by Asset Type as of January 31, 2024 (£bn)
Source: LSEG Lipper
LSE-listed ETF assets added about £10bn to their total over January, stretching for that £1trn mark, but didn’t quite make it. Next month, surely?
Aggregate ETF assets grew by 1.1% over January, and 17.2% on an annual basis. Money market funds saw the greatest growth in percentage terms, both on a month-on-month (3.4%) and a year-on-year (63.3%) basis. Conversely, mixed asset ETFs where the only asset class to shrink, but this is from a small base, with MA assets only comprising 0.2% of the ETF total.
Equity and bond funds comprise the overwhelming majority of the total, at 76% and 21.6% respectively.
Flows
Chart 2: Estimated Net Flows in ETFs Listed on the LSE by Asset Type, January 2024 (£bn)
Source: LSEG Lipper
Total flows were greater than net asset increases, at £12.6bn for the month (£100.96bn over 12 months), exceeding the highest inflows for 2023, which were £12bn.
However, equity flows were down from December’s £10.22bn, at £8.7bn (£71.5n for the year). Bond ETFs rebounded to £3.46bn, from December’s £645m, but still below November’s £3.74bn. Money market funds took £294m, and £3.69bn over 12 months.
Alternatives (£76m), commodities (£58m) and mixed assets (£2m) all saw modest inflows for the month.
Chart 3: Ten Best-Selling Lipper Global Classification, January 2024 (£bn)
Source: LSEG Lipper
Over the month, Japanese and US equities outperformed the FTSE All-World and peers. As was the case in December, Equity US (£3.99bn) and Equity Global (£3.42bn) funds saw the largest inflows in January. As you’d expect, the bulk of this went into plain vanilla S&P trackers, with £272m going to JP Morgan’s ESG enhanced index product. The trend we saw to equally weighted S&P plays last year seems to have waned, with investors seemingly happy (for now) to back the Magnificent Seven’s market leadership.
Source: LSEG Lipper
Likewise, most of the global cash has gone to conventional blue-chip indexed products, with a nod to ESG with the Xtrackers MSCI World ESG product (see table below)
Source: LSEG Lipper
December’s influx to European equity has abated, with fixed income rebounding, especially to Bond EUR Corporates (£1.64bn), Bond EUR High Yield (£703m) and Bond USD Inflation Linked (£391m). The latter, along with the £273m Bond USD Government Short Term would seem to indicate that significant parts of the market don’t see the beast of US inflation yet laid to rest.
Investors are still backing the Japan rally, as equity ETFs in this space took £450m, with nods also to healthcare (£359m) and information technology (£275m), with healthcare the top performing on average across regions, followed by technology, financials, discretionary and staples. The three top holdings in the three top-selling IT ETFs were Apple, Microsoft and Nvidia.
Chart 4: Ten Largest Outflows by Lipper Global Classification, January 2024 (£bn)
Source: LSEG Lipper
Equity China saw the largest outflows in December, as investors redeemed £470m, with Equity Emerging Markets Asia ETFs also seeing outflows of £244m. December’s positive flows to European equities were reversed in January, as Equity Europe and Equity Eurozone saw collective redemptions of £422m, with European indices lagging global peers.
With long-duration bonds were challenged by rising long yields in the US, UK and Europe, it is perhaps no surprise to see money coming off the table for Bond USD Corporates (-£341m) and Bond USD Government (-£230m). What is a tad more surprising is to see Bond EUR Corporates Short Term not to enjoy the popularity of USD short-term fixed income, instead shedding £135m,
Chart 5: Sustainable ETF Sales, (LHS, £m), and Estimated Net Flows (RHS, £bn), January 2024
Source: LSEG Lipper
Some £156.88bn of ETF assets on the London Stock Exchange are defined by Lipper Research as sustainable (see definition below). The bulk (82.56%) are equity, with 17.43% in bond vehicles. The merest sliver (0.01%) are mixed-assets.
Over January, sustainable equity ETFs attracted £652m, while their fixed income peers took £14m. This is well down from December’s £3.82bn and £660m respectively.
As can be seen from the table below, flows mirrored the wider market, with investors favouring US and Global equity ETFs, along with global emerging markets, which also saw more modest inflows in aggregate.
Source: LSEG Lipper
The Sustainable 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.
Trading Volumes and ETF Flows
Chart 6: ETF Turnover (GBP m) and as a % of Total London Stock Exchange Order Book Turnover
Source: LSEG Lipper
The average traded value for ETFs in January was £10.29bn, which accounts for 13.72% of total London Stock Exchange average daily turnover. While the absolute number is down from December’s, as can be seen from the chart above, it’s a slightly lower proportion of the total LSE trades, albeit above the two-year average of 12.27%.
Table: Top Traded ETFs on London Stock Exchange in January 2024
Source: LSEG
Chart 7: Active and Passive, Total Net Assets (LHS, %), and Estimated Net Flows (RHS, £bn), January 2024
Source: LSEG Lipper
There are 73 active and 1,657 passive ETFs listed on the LSE, compared to 137 active and 3,020 passive ETFs registered for sale in at least one country in Europe. This means that 53.3% of all active and 54.9% of all passive ETFs are at least cross listed on the LSE.
Active ETFs total net assets were 1.51% of the total. Active ETFs saw inflows of £484m, down on the December figure, but reversing the two previous months of redemptions, with flows dominated by JP Morgan, Pimco and Franklin (see table below). Meanwhile, their passive peers attracted £12.08bn.
Source: LSEG Lipper
New Listings
Chart 8: New listings on the London Stock Exchange since 2004
Source: LSEG Lipper
There have been 11 launches in January, up from December’s doldrums of just five. All were equity.
Of the 11 launches, six were US Active funds from JP Morgan. Eight had a US geographical focus.
Source: LSEG Lipper
Flows by Promoter
Chart 9: 10 Best-Selling ETF Promoter for ETFs Listed on LSE, January 2024 (£bn)
Source: LSEG Lipper
There are 27 promoters with ETFs on the LSE. Five had flows of more than £1bn over January, up from the previous ‘holding pattern’ of four, while ten accounted for flows of more than £100m. Some 17 of the 27 saw inflows.
BlackRock attracted the largest number of assets, at £7.17bn, well ahead of December’s £4.75bn. Its most successful asset class was equity (£3.99bn) and bond (£2.96bn). Second-placed Vanguard took £1.9bn, with £1.51bn in equity flows and £399m in bonds.
[1] This report covers all assets under management and estimated net flows for ETFs listed on the London Stock Exchange. This means while turnover and trading volume are measures that are taken per exchange, flows and assets under management can only be calculated on a pan-European basis, since most ETFs in this report are cross-listed on various exchanges.
