Asset class view
- Money market funds (MMFs) saw significant inflows of £6.75bn.
- The £1.25bn flows into equity funds were the largest since April 2023.
Active v passive
- Index-tracking funds overall took £3.37bn for the month, considerably besting June’s £805m.
- There were outflows of £843bn from active equity funds, and positive flows of £2.07bn into trackers.
Classifications
- Money Market GBP was the top classification by flows in July, attracting £6.47bn.
- Equity UK shed £3.68bn and Equity UK Income £1.02bn, despite the outperformance of the UK over the month.
Sustainable fund flows
- Sustainable funds ex-MMF took £1.77bn, while their conventional peers shed £674m.
- Sustainable equity funds netted £1.6bn, as their conventional peers saw outflows of £379m.
Asset manager view
- HSBC was July’s top money-taker, netting £2.78bn, followed by BlackRock with £2.36bn.
Flows by Asset Class
Three-year flows
Chart 1: Asset Class Flows, 36 Months, to July 2024 (£bn)
Source: LSEG Lipper
The second consecutive month where money market funds (MMFs) were the largest money takers, although the biggest news is that flows to equity funds were the strongest of the year (£1.25bn), despite the rally of H1 stuttering as a precursor to August’s volatility. And, despite that rally, there hasn’t been a continuous direction of equity flow of more than two months’ duration over the year.
Mutual funds and ETFs have taken £14.13bn over the first seven months of the year—£7.82bn excluding MMFs. Bonds have been the most successful, attracting £7.5bn over the year, followed by MMFs at £6.3bn, then, some way behind, equities at £1.78bn, then mixed assets at £1.23bn.
On the negative side of the equation, real estate funds shed £1.28bn YTD; alternatives, £1.56bn, and commodities, £148m.
Active versus Passive
Chart 2: Asset Class Flows, Active and Passive, July 2024 (£bn)
Source: LSEG Lipper
While global equity indices trended downwards from mid month, the UK—both FTSE 100 and 250—bucked the trend, and headed up over the back end of July.
Last month, we noted that June had seen the largest inflows into MMFs (£3.76bn) since December 2023. Well, July said “hold my beer”, and almost doubled those flows at £6.75bn. However, while one could interpret a large-scale move into cash as a definite “risk-off” signal, the £1.25bn flows into equity funds were the largest since April 2023, following June’s dip into the red. Within this, we see the continuation of the rotation from active to passive strategies, with outflows of £843bn from active funds, and positive flows of £2.07bn into trackers.
Likewise, the rather muted £49m to bond funds in July masks an outflow of £1.13bn from active funds and an inflow of £1.18bn into passives.
Alternatives reversed its positive June, with outflows of £270m, while mixed assets took a modest £69m, and real estate £23m.
ETFs and Passive Mutual Funds
Chart 3: Passive Asset Class Flows, Mutual Funds v ETFs, July 2024 (£bn)
Source: LSEG Lipper
Index-tracking funds overall took £3.37bn for the month, considerably besting June’s £805m. Mutual funds took the lion’s share of this, at £2.92bn, while ETFs netted £449m.
The total inflows of £2.07bn to passive equities split £1.88bn to mutual funds, and £186m to ETFs. Passive bond mutual funds attracted £973m while their ETFs peers took £205m. Mixed-assets passive mutual funds attracted £63m.
Flows by Classification
Largest inflows
Chart 4: Largest Positive Flows by LSEG Lipper Global Classification, July 2024 (£bn)
Source: LSEG Lipper
Money Market GBP was the top classification by flows in July, attracting £6.47bn.
Disinflation and a shift in sentiment over US monetary policy outlook drove yields lower, according to FTSE Russell analysis. It was a good month for small caps and strengthening sterling, with the FTSE 250 outperforming, followed by Japan and FTSE 100. Equity UK Small & Mid Cap for once benefited from this, to the tune of £281m.
Despite US, emerging market, and European equities lagging global index, all were comfortably in the black, attracting £3.44bn, £388m and £261m, respectively.
Source: LSEG Lipper
Year to date, the three top-selling US fund share classes are all from the BlackRock stable: BlackRock ACS North America ESG Insights Eq X1 GBP (£4.65bn); Coutts North America ESG Insights Eq C Dis GBP (£3.98bn); and iShares North American Equity Index (UK) D Acc (£1.83bn). The first two are actively managed sustainable funds, the third a passive conventional one.
Source: LSEG Lipper
Strong flows for Mixed Asset GBP Aggressive also continued, attracting £1.28bn. Year to date, that tally rises to £8.92bn, contrasting with the £1.23bn for the flows to the asset class as a whole.
Largest Outflows
Chart 5: Largest Outflows by LSEG Lipper Global Classification, July 2024 (£bn)
Source: LSEG Lipper
It might have been a good month in relative terms for UK equity performance, but (excepting small and mid caps) it wasn’t for UK equity flows, as Equity UK shed £3.68bn (£2.93bn active/£745m passive) and Equity UK Income £1.02bn.
Despite the strong showing for Mixed Asset GBP Aggressive funds, its Balanced and Conservative peers lost £917m and £170m, respectively.
Interesting to see £297m come off the table for Bond Global High Yield GBP, though there’s little movement in other HY classifications. In addition, £689m of the £811m withdrawn from a fund getting exposure to the Global HY market through CDS.
Sustainable Fund Flows
Chart 6: Sustainable Asset Class Flows, July 2024 (£bn)
Source: LSEG Lipper
Sustainable funds ex-MMF took £1.77bn—almost doubling June’s £865m, while their conventional peers shed £674m (ex MFFs). Sustainable equity funds were the main beneficiaries, attracting £1.6bn, as their conventional peers saw outflows of £379m. All this and more was netted by one Equity US share class (£2.2bn, see table below).
Source: LSEG Lipper
Sustainable bond flows took £288m as their conventional peers shed £239m, while sustainable mixed-assets funds suffered outflows of £138m as their conventional peers netted £207m.
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, July 2024 (£bn)
Source: LSEG Lipper
HSBC was July’s top money-taker, netting £2.78bn, followed by BlackRock (£2.36bn) and abrdn (£1.56bn). HSBC’s flows were dominated by MMFs, at £1.77bn, followed by equities, at £471m.
Source: LSEG Lipper
BlackRock’s flows were more broadly based, and comprised equity (£!.38bn), mixed assets (£580m), bond (£351m), and MMF (£123m).
Source: LSEG Lipper
