Asset class view
- Bonds took £2.6bn, split £3.49bn to passives and -£887m to active funds.
- Equities were the second-most popular asset class, with £1.15bn of inflows, while money market funds saw outflows of £5.2bn.
Active v passive
- Ex MMFs, active strategies took £2.23bn as passives netted £1.07bn.
- Passive equity funds suffered redemptions of £2.51bn as their active peers attracted £3.66bn.
Classifications
- Equity Global ex UK was the top-selling classification, netting £6.22bn.
- Equity UK had a rare spike in sales, with inflows of £2.04bn.
Sustainable fund flows
- Total sustainable fund flows were £6.69bn, as conventional funds shed £3.01bn excluding money market funds (MMFs).
- Sustainable equities saw £6.33bn of inflows and £5.17bn of conventional outflows, with the former dominated by BlackRock new launches.
Asset manager view
- BlackRock was October’s top money taker, netting a huge £12.68bn.
Flows by Asset Class
Three-year flows
Chart 1: Asset Class Flows, 36 Months, to October 2024 (£bn)
Source: LSEG Lipper
Despite fears of the late-September budget triggering investors’ rush for the exit, as we saw exactly two years ago (Exhibit A: the big blue line on chart 1), October turned out to be a good month overall for risk assets, with MMFs seeing the largest redemptions. That said, the previous report recorded the largest outflows of risk assets in September for two years. Equities saw the largest inflows since July, although still suffering £5.69bn of redemptions YTD.
Although a rise in long end of the UK yield curve resulted from the government’s signalling of greater reliance on fiscal policy, bonds saw the strongest inflows—their highest since May—taking £7.39bn YTD, retaining their place as the most popular asset class. And, although MMFs suffered the largest outflows since February, they are still the second-most popular asset class YTD, netting £7.37bn.
Mixed-assets funds have seen YTD inflows of £3.45bn, and commodities have taken £479m. On the minus side, alternatives have suffered outflows of £3.02bn and real estate £1.64bn over the period.
Active versus Passive
Chart 2: Asset Class Flows, Active and Passive, October 2024 (£bn)
Source: LSEG Lipper
It was a very different month from September, when risk assets were largely in redemption mode. In October, bonds took £2.6bn, split £3.49bn to passives and outflows of £887m to active funds. Equities were the second-most popular asset class, with £1.15bn of inflows. Here, however, the current runs counter to the norm, as passives suffered redemptions of £2.51bn and actives attracted £3.66bn. As we’ll see, the dial is moved here by some large allocations to new BlackRock funds. Commodities saw modest inflows of £36m, mainly to active products.
The largest outflows were from MMFs, at £5.2bn. So, clearly, the budget didn’t spark a dash for cash. What has caused this, then? Possibly, the recent bear steepening has tempted some investors out of cash and towards higher-yielding fixed income instruments. It’s often a difficult market to call, as corporates make use of these vehicles for a number of reasons, all of which can have significant impacts on the market.
Alternatives saw outflows of £338m, all and more from active vehicles, mixed assets shed £129m and real estate £32m. Again, this is generally active money.
ETFs and Passive Mutual Funds
Chart 3: Passive Asset Class Flows, Mutual Funds v ETFs, October 2024 (£bn)
Source: LSEG Lipper
The largest passive outflows were from equities: £2.51bn. Within this, however, equity ETFs attracted £510m. On the other hand, it was a good month for passive fixed income, as mutual funds took £3bn and ETFs £489m.
Flows by Classification
Largest inflows
Chart 4: Largest Positive Flows by LSEG Lipper Global Classification, October 2024 (£bn)
Source: LSEG Lipper
This month’s classification-level flows are impacted by some major single allocations, which we’ll see when also in the sustainable flows section. Equity Global frequently takes the top slot… ex-UK, somewhat less so. Net flows weigh in at £6.22bn. However, as you can see from the table below, this is skewed by a £6.23bn allocation to one share class. This seems to be the result of the consolidation of a number of funds across various geographies into one global fund.
Source: LSEG Lipper
If it’s unusual to see Equity Global ex UK occupy the top of the table, it’s rarer than a rooster’s canines to see Equity UK coming in at number 2, as the classification has been resolutely in redemption mode for years. We’ve pondered as to what the bottom looks like, and maybe this is (nearly) it? Or maybe not. Again, the inflows—£2.04bn in this instance—are dominated by one allocation of £2.64bn. Whatever the reason, someone, somewhere is optimistic about UK plc.
Source: LSEG Lipper
On the fixed income front, Bond Global USD (£1.45bn) and Bond GBP Government (£1.1bn) had the strongest showing. Meanwhile, Mixed Asset GBP Aggressive continues its strong run (£1.49bn), as it’s balanced and conservative peers struggle. What’s interesting is the more muted flows to Equity US (£732m), which we’re used to seeing higher up the table—although it’s worth noting that the previous month, these funds saw significant outflows.
Largest Outflows
Chart 5: Largest Outflows by LSEG Lipper Global Classification, October 2024 (£bn)
Source: LSEG Lipper
Given the situation at the asset class-level, Money Market GBP outflows of £5.21bn are to be expected. What’s rather more surprising is the £2.84bn of redemptions from Equity Global. Again, these are driven by a £2.63bn outflow from one share class—that of a sustainable passive fund.
Equity Asia Pacific ex Japan continues its negative run, with redemptions of £1.09bn, and £5.83bn over 12 months. Equity Emerging Mkts Global suffered a similar level of redemptions (1.08bn), although the classification has attracted £1.22bn over 12 months.
The £927m redeemed from Absolute Return GBP Medium and Absolute Return GBP High are largely from IA Target Return sector funds, indicating that the sector continues to struggle following a general failure to live up to its early promises.
Sustainable Fund Flows
Chart 6: Sustainable Asset Class Flows, October 2024 (£bn)
Source: LSEG Lipper
Total sustainable fund flows for October were £6.69bn—a bumper month, by any standards—as conventional funds shed £8.63bn, or £3.01bn excluding MMFs. The largest movements were among equities, with £6.33bn of sustainable inflows and £5.17bn of conventional outflows. The plus side of the equation is dominated by BlackRock, largely with funds launched this month (see table below).
Source: LSEG Lipper
Despite outflows for MMFs overall, sustainable MMFs took £419m. Or, rather, to correct slightly: one MMF, as the flows are dominated by one fund alone (see below).
Source: LSEG Lipper
Movements were modest in other asset classes, with sustainable bonds seeing inflows of £37m, and mixed assets, real estate, and alternatives outflows of £70m, £12m, and £11m, respectively.
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, October 2024 (£bn)
Source: LSEG Lipper
BlackRock was October’s top money taker, netting a huge £12.68bn. The bulk went to equities (£9.96bn), followed by bonds (£1.63bn). As indicated in the sustainable section, much of this is accounted for by sustainable equity fund launches.
Source: LSEG Lipper
Phoenix group comes in second, netting £2.64bn, with all of this being accounted for by PUTM UK All Share Index Unit Trust Acc.
