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April 16, 2024

London Stock Exchange-Listed ETF Report: March 2024

by Dewi John.

Headline figures

Assets Under Management[1]

Chart 1: Assets Under Management of ETFs Listed on the LSE by Asset Type as of March 31, 2024 (£bn)

Source: LSEG Lipper


Total ETF assets grew by £33.94bn over March through a combination of inflows and market moves: a growth of 3.3% over March and 26.7% on an annual basis. Commodity funds saw the greatest growth in percentage terms on a month-on-month basis (8.1%), although growing at a modest 1.7% year on year. Note also that this monthly growth is from a low base, as just 1% of ETF assets are held in commodity funds. On an annualised basis, money market ETFs grew the most, at 43.5%, followed by equities (31.8%) and bonds (11%). Conversely, mixed-assets ETFs were once more the main negative movers, down to 68.4% of their assets 12 months ago, albeit from a low base—currently 0.1% of ETF assets.

Equity and bond funds comprise the overwhelming majority of the total, at 77.9% and 19.9%, respectively.




Flows by Asset Type

Chart 2: Estimated Net Flows in ETFs Listed on the LSE by Asset Type, March 2024 (£bn)

Source: LSEG Lipper


Total flows were in line with February’s and barely half those of January (£12.6bn), at £6.08bn (£99.84bn over 12 months). That said, January exceeded the highest monthly inflows for 2023.

Equity funds netted all of this and more, at £6.98bn (£76.74bn over 12 months)—even though Europe and the UK both entered a technical recession, which is supposed to send investors scurrying for “safe” assets such as bonds. Nevertheless, Q1 was positive for equities, and flows reflected this. Commodity funds had a rare time in the black, at £367m, followed by money market funds (£221m).

All other asset classes were in negative territory. As was the case last month, the largest outflows were from bond ETFs, which shed £993m, as rising long yields continued to impact rate-sensitive sectors and government bonds struggled. Investors are still mulling over the timing of developed market central banks’ first rate cuts and were disinclined to continue last years’ rush into fixed income, with bond ETFs seeing inflows of £20.51bn over 12 months.


Largest Inflows

Chart 3: Ten Best-Selling Lipper Global Classifications, March 2024 (£bn)

Source: LSEG Lipper


Over Q1, Japan and the US led equity markets outperforming the FTSE All World and peers over three and 12-month, according to FTSE Russell data, with Japan leading the way over the quarter. This has been reflected in flows only partially, however, with Equity Japan seeing inflows of £181m over Q1, and outflows of £96m over 12 months.

ETF buyers are continuing to deploy to Equity Global (£2.85bn, and £32.56bn over 12 months) and US (£2.51bn and £33.42bn respectively—see tables below). What’s going on? In an uncertain environment of rising stocks and (for Europe and UK) negative GDP growth, it may be best to spread those bets widely. You want to be along for the ride, but who knows when it ends. Plus, the Magnificent Seven has become the Super Six. How long till the Fab Five? So the leadership of the S&P 500 gets ever narrower. But, as Chuck Prince famously said, “as long as the music is playing, you’ve got to get up and dance”.

Other classifications lag significantly, the next being Equity Emerging Markets Global (£760m and £5.35bn respectively), despite the rocky fortunes of major constituent China. Equity China ETFs themselves saw inflows of £238m, slightly lagging Equity India, at £247m. As was the case last month, European equities also proved popular, this time in the guise of the Eurozone (£560m).

Technology performed strongly over the quarter, and this was reflected in Equity Sector Information Tech flows, at £522m. And, despite losses over the quarter, Bond USD Government and Bond EMU Government LT attracted assets (£368m and £282m) as investors may have been reassured by government bonds stabilising over the month.


Source: LSEG Lipper


Source: LSEG Lipper


Largest Outflows

Chart 4: Ten Largest Outflows by Lipper Global Classification, March 2024 (£bn)

Source: LSEG Lipper


For the second consecutive month, Bond EUR Corporates saw the highest redemptions (-£1.16bn Mar/-£2.25bn Feb, compared to inflows of £2.73bn over 12 months). Paradoxically, given the strong performance over 12 months and Q1 performance that beat both UK and EM equities, Equity Europe saw outflows of £827m. That’s even more paradoxical when contrasted to the £560m inflows for Equity EuroZone.

There are some other strange things going on. For example, £448m was redeemed from Bond USD Government Short Term ETFs (not to mention the £108m redeemed from Bond EMU Government Short-Term ETFs) despite the re-inversion of yield curves that had briefly steepened. And, with inflation sticky but not spiking—an environment that should be good for linkers–£156m was pulled from Bond EUR Inflation Linked.


Sustainable ETFs

Chart 5: Sustainable ETF Sales, (LHS, £m), and Estimated Net Flows (RHS, £bn), March 2024

Source: LSEG Lipper


Some £159.36bn of ETF assets on the London Stock Exchange are defined by Lipper Research as sustainable, held across 429 vehicles (see definition below), down from £163.33bn in February. The bulk (83.52%) are equity, with 16.46% in bond vehicles.

Total sustainable flows are £999m for the month—pretty much level with February. Sustainable equity ETFs attracted £770m (down from £802m in February), while their fixed income peers took £230m—again, up from February’s £199m and January’s £14m, but still well down on December’s £660m.

As can be seen from the table below, flows mirrored the wider market, with investors favouring Global and US equity ETFs, with the £336bn to a Bond Global Corporates EUR vehicle being the only divergence from the month’s trend—as was the case in February. Indeed, March’s table looks very similar to February’s.


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

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 March was £10.52bn, in line with the previous month, which accounts for 11.7% of total London Stock Exchange average daily turnover, a lower proportion than for February.

The two top-traded ETFs by volume reflected the highest inflows by Lipper Global Classification in chart 3, being Equity Global and Equity US—iShares MSCI World and S&P 500 products (see table below). That said, chart 6 and the table below don’t give the direction of flow, with Equity UK seeing outflows (see chart 4). What’s more, chart 4 will capture the flows for other exchanges on which the ETFs are listed, whereas chart 6 by definition captures UK trades, which is why we see the FTSE 250 appear—though, again, there’s no indication of the direction. However, given the largest bar on Chart 4, it’s pretty clear that the Bond EUR Corporates listing, below, is a redemption.


Top Traded ETFs on London Stock Exchange in March 2024

Source: LSEG


Active ETFs

Chart 7: Active and Passive, Total Net Assets (LHS, %), and Estimated Net Flows (RHS, £bn), March 2024

Source: LSEG Lipper


There are 81 active and 1,677 passive ETFs listed on the LSE. Active ETFs total net assets were 1.62% of the total, or £16.43bn. Active ETFs saw inflows of £543m, down from £664m in February, with flows dominated by JP Morgan (see table below). What’s also of note in the table below is that all its members are ESG or SRI funds.

Meanwhile, passive ETFs attracted £5.54bn—marginally down on the prior month.


Table: Five Best-selling Active ETFs, March 2024 (£m)

Source: LSEG Lipper


New Listings

Chart 8: New listings on the London Stock Exchange since 2004

Source: LSEG Lipper


There have been 52 launches over the first quarter. Some 16 were over March: eight were equity, eight bond, and one commodity.

Of the 16 launches, two were active—two high income vehicles from iShares. iShares has been busiest, with six launches, across both equity and bond, followed by State Street (three launches) and HSBC, UBS, and DWS with two apiece. L&G launched one multi-strategy commodity fund (see table on following page).


New Launches, March 2024

Source: LSEG Lipper


Flows by Promoter

Chart 9: 10 Best-Selling ETF Promoter for ETFs Listed on LSE, March 2024 (£bn)

Source: LSEG Lipper


There are 27 promoters with ETFs on the LSE. Only one had flows of more than £1bn over March, compared to four last month. Ten accounted for flows of more than £100m. Some 20 of the 27 saw inflows.

Vanguard attracted the largest number of assets, at £1.33bn, with strong flows to equity products (£1.07bn). Second-placed JPMorgan took £856bn, with £791m in equity flows and £64m 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.

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