Headline figures
Assets Under Management[1]
Chart 1: Assets Under Management of ETFs Listed on the LSE by Asset Type as of July 30, 2024 (£bn)
Source: LSEG Lipper
Total ETF assets were £1.14bn in July, growing 26.6% on an annual basis. As was the case in June, money market funds (MMFs) saw the greatest growth in percentage terms on a month-on-month basis (8.5%).
On an annualised basis, MMF ETFs also grew the most, at 55.8%, followed by equities (31.8%) and bonds (9.8%). 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. Commodity and alternatives assets also shrank on a 12-month view, with commodity assets seeing the largest monthly drop, at 89.3% of their June value.
Equity and bond funds comprise the overwhelming majority of the total, at 78.5% and 19.3%, respectively.
Flows
Flows by Asset Type
Chart 2: Estimated Net Flows in ETFs Listed on the LSE by Asset Type, July 2024 (£bn)
Source: LSEG Lipper
Total flows for July were marginally down from June’s £11.6bn, at £10.2bm (£113.88bn over 12 months). They were, however, more broad-based than in the previous month, when bonds sold off and equities were pretty much the only game in town.
Despite global equities heading downwards from mid-month, as H1’s rally began to show significant signs of strain, equity ETFs still saw the largest inflows, at £6.16bn (£98.14bn over 12 months). Bonds reversed the previous month’s negative flows and attracted £3.2bn (£12.66bn for 12 months), while MMFs were in the black to £1.12m (£4.18bn); alternatives £193m (-£784m); and mixed assets £56m (-£534m). Commodity ETFs suffered the only outflows in July, at -£531m (£235m), possibly hit by fears of a weakening US economy following a softer jobs report than anticipated on July 5. That, however, needed to be netted off against stronger US GDP growth than anticipated in Q2, at an annualised 2.8%.
Largest Inflows
Chart 3: Ten Best-Selling Lipper Global Classifications, July 2024 (£bn)
Source: LSEG Lipper
Equity US (£3.34bn/£41.77bn for the year) and Equity Global (£1.67bn/£34.8bn) were the two top-selling classifications for the month—as was the case for June—despite their negative performance over the month, driven by a sell off from mid-month. While the top-three of the top-five Equity US sellers in the table below are cap-weighted trackers, it’s interesting to see the presence of one equal-weighted fund—something we’ve not really seen since Q3 of last year, when some investors were flirting with this approach. It’ll be even more interesting to see how this plays out in August’s figures, given the current state of markets.
Source: LSEG Lipper
The fifth place in both tables are occupied by members of the JPM Research Enhanced ESG funds, indicating active incursions into these ETF markets.
Source: LSEG Lipper
What’s also worthy of note is the presence of small cap, as Equity US Sm&Mid Cap (£876m/£1.7bn) and even the long-spurned Equity UK Sm&Mid Cap (£379m/£900m) made appearances. Small caps broadly outperformed the benchmark in July after lagging YTD, as the FTSE 250 outperformed most major indices.
What’s also of note is that Bond EUR High Yield saw the largest outflows in June, but retuned to positive territory in July, attracting £286m, making it the twelfth most popular classification.
Largest Outflows
Chart 4: Ten Largest Outflows by Lipper Global Classification, July 2024 (£bn)
Source: LSEG Lipper
Commodity Blended ETFs sold off most heavily over the month, losing £544m, followed by Equity Japan (-£318m), as investors lost faith in the country’s rally after a negative Q2. Investors also further sold down Equity China to the tune of £267m.
There was also a sell-off of a broad swath of equity sectors: Equity Sector Healthcare (-£275m); Equity Sector Financials
(-£240m); Equity Sector Industrials (-£139m); along with Equity Sector Energy (£58m) and Equity Sector Gold & Precious Metals (-£56m). Equity Themes Water (-£87m) and Alternative Energy (-£83m) also continued their negative run, though at a more slackened pace.
Sustainable ETFs
Chart 5: Sustainable ETF Sales (LHS, £m) and Estimated Net Flows (RHS, £bn), July 2024
Source: LSEG Lipper
Total sustainable flows were well below June’s £3bn, taking just £224m in July. In a strong reversal of trend, sustainable equity ETFs saw outflows of £437m, while their fixed income peers took £662m. However, like their conventional peers, it was Equity US which topped the tables, followed by Equity Global (see below), with fixed income flows going to euro-denominated corporate ETFs.
Some £167.72bn of ETF assets on the London Stock Exchange are defined by Lipper Research as sustainable, held across 431 vehicles (see definition below), up from £166.68bn in June. The bulk (83.93%) are equity, with 16.07% in bond vehicles.
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 bn) and as a % of Total London Stock Exchange Order Book Turnover
Source: LSEG Lipper
The average traded value for ETFs in July was £12.87bn, up from the previous month’s £11.44bn, accounting for 14.39% of total London Stock Exchange average daily turnover, which beats the previous peak of 14.45% in October 2022—where trading was impacted by the government’s mini-budget of the previous month.
Top Traded ETFs on London Stock Exchange in July 2024
Source: LSEG
Unsurprisingly, the table above reflects the dominant flows to Equity US and Global funds (six out of the top 10), plus the continuing popularity of US money market funds. Slightly more unusually, and likely reflecting the strong performance of the FTSE 250, two funds in the table invest in the index.
Active ETFs
Chart 7: Active and Passive, Total Net Assets (LHS, %), and Estimated Net Flows (RHS, £bn), July 2024
Source: LSEG Lipper
There are 82 active and 1,720 passive ETFs listed on the LSE. Active ETFs total net assets were 1.81% of the total, or £20.61bn. Active ETFs saw inflows of £697m, down from June’s £867m, reflecting the weaker flows in general for the month. Flows were dominated by JP Morgan, which took £600m (see table below). Invesco had the second-largest sustainable flows, at £44m. What’s also of note in the table below is that, as in the previous four months, all its members are ESG funds.
Meanwhile, passive ETFs attracted £10.2bn.
Table: Five Best-selling Active ETFs, July 2024 (£m)
Source: LSEG Lipper
New Listings
Chart 8: New listings on the London Stock Exchange since 2004
Source: LSEG Lipper
There have been 117 launches year to date. Some 11 were over July. Of the launches this month, five were bond, with the rest being equity.
The five Invesco launches are target maturity fixed income products, each with a different terminal date, while the five iShares launches are actively managed, covering different core geographies (see table below).
New Launches, July 2024
Source: LSEG Lipper
Flows by Promoter
Chart 9: 10 Best-Selling ETF Promoter for ETFs Listed on LSE, July 2024 (£bn)
Source: LSEG Lipper
There are 29 promoters with ETFs on the LSE. Five had flows of more than £1bn over July, the same as May and up from June’s two, with the largest being BlackRock (£4.26bn). BlackRock netted £2.1bn in bond and £1.55bn in equity flows, while the bulk of second-placed Vanguard’s £1.74bn went to equity ETFs (£1.34bn).
Nine providers suffered outflows.
[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.
