Asset class view
- Total YTD flows for mutual funds and ETFs were £8.07bn (-£3.75bn ex MMFs).
- May saw an MMF exodus and a move into bonds, with the latter being the most popular asset class (£3.39bn).
Active v passive
- Excluding MMFs, passive funds attracted £4.08bn in May (mutual funds: £2.79bn; ETFs, £1.3bn).
- Bonds were the most successful passive asset class (mutual funds, £3.02bn; ETFs, £768m).
Classifications
- The three top classifications were Bond Global USD (£2.7bn); Bond GBP Government (£902m); and Bond JPY (£851m).
- Summing Equity Europe ex UK (£818m) and Equity Eurozone (£436m) makes Continental equities the second-most popular classification overall, and UK investors seem to be at last waking up to their YTD performance.
Sustainable fund flows
- Net sustainable flows for the month were £334m. Excluding MMF flows, conventional funds suffered
outflows of £1.48bn.
- Bonds were the most popular sustainable asset class in May, attracting £403m.
Asset manager view
- BlackRock saw the largest inflows, netting £1.58bn, with £1.86bn to bond funds.
Flows by Asset Class
Three-year flows
Chart 1: Asset Class Flows, 36 Months, to May 2025 (£bn) 
Source: LSEG Lipper
May fund flows—both positive and negative—were subdued relative to April, and saw a flip from MMFs to bonds. Unlike in April, when normalising yield curves failed to tempt investors out of money market funds and into bonds, investors filled their boots with fixed income in May (£3.39bn), with the largest allocations to the asset class YTD. This pushed long-term fund flows up to the highest level so far this year (£2bn) and ahead of the 12-month rolling average (£477m) despite redemptions elsewhere.
Nevertheless, YTD bond flows are -£5.52bn, with the asset class being further in the red than any other over the year.
Total YTD flows for mutual funds and ETFs were £8.07bn (-£3.75bn ex MMFs). MMFs, though seeing redemptions this month, saw the largest flows over 2025 so far (£11.82bn), followed by mixed assets (£2.34bn) and commodities (£637m). Conversely, along with bonds, real estate (-£580m), equities (-£489m), and alternatives (-£137m) were in the red.
Active versus Passive
Chart 2: Asset Class Flows, Active and Passive, May 2025 (£bn)
Source: LSEG Lipper
Over May, risk assets gained in a “relief rally,” as markets headed up on the (albeit thin) positive news that the highest tariff implementation was paused until early July. While the S&P 500 was still off its February all-time high, it recovered substantially over the course of May from April’s trough. Equities broadly, particularly tech and cyclical industries, rallied. Nevertheless, there were net equity redemptions of £980m, albeit with inflows of £181m to passive funds.
May saw a dumping of MMFs and a move into bonds, with the latter being the most popular asset class for the month (£3.39bn: -£399m active; +£3.79bn passive). The rotation from active to passive bond funds continues: of which, more under chart 4, below.
Gold, the best performing asset class YTD, was flat over May. That £562m spike in commodity flows in the chart above—I don’t recall seeing commodities as the second most popular asset class over a month before—isn’t down to investors piling into precious metals funds, however, but through diversified commodity plays, particularly one £546m allocation to a Commodity Blended actively managed fund. Single commodity exchange-traded products are ETCs rather than ETFs, so allocations here would not be captured in Lipper fund flow data.
While alternatives also saw modest inflows (£49m), mixed assets (-£973m), equities (-£980m, with +£181m to passives), and real estate (-£45m) all suffered outflows.
ETFs and Passive Mutual Funds
Chart 3: Passive Asset Class Flows, Mutual Funds v ETFs, May 2025 (£bn)
Source: LSEG Lipper
Excluding MMFs, passive funds attracted £4.08bn in May (mutual funds: £2.79bn; ETFs, £1.3bn), while active funds shed £2.08bn.
As stated above, passive bonds were the most successful for the month (mutual funds, £3.02bn; ETFs, £768m), followed by equities (mutual funds, -£311m; ETFs, £492m). All of the £88m to mixed assets were mutual funds flows, and all the MMF flows to ETFs.
Flows by Classification
Largest inflows
Chart 4: Largest Positive Flows by LSEG Lipper Global Classification, May 2025 (£bn)
Source: LSEG Lipper
Global equities were broadly up, unlike in April when there was higher return dispersion. Risk-free yields rose in major developed markets while they declined in several key emerging markets, according to FTSE Russell analysis.
Although the Bank of England cut by 25 basis points (bps) in early May, both the US Fed and the Bank of Japan held rates given inflationary pressures. Ten-year government yields rose around 20 bps in the US, the UK, and Japan, possibly contributing to the attractions of the three top classifications for the month: Bond Global USD (£2.7bn, with this classification having seen the third-largest outflows in April); Bond GBP Government (£902m); and Bond JPY (£851m). Virtually all of the Bond JPY allocation went to one share class of an enhanced-index Japanese government bond fund.
All the money to these top three and more went to passive vehicles. Active fixed income managers are arguing the case that in times of increasing market stress, investors don’t want to be caught in the most indebted parts of the market that passives largely offer. How true that is, time will tell, but investors aren’t currently paying much attention—though, as I speculate below, there may be specific reasons for this unrelated to the underlying portfolios.
GBP high yield offered the best return for unit risk, according to FTSE Russell. Nevertheless, there was little investor interest here, with Bond USD High Yield (£162m) and Bond Global High Yield USD (£159m) the most popular HY classifications, with (unusually, of late) none in negative territory.
Source: LSEG Lipper
Regarding equities, the Russell 1000, FTSE 250, and Eurozone indices outperformed FTSE All-World, while the Russell 2000, Japan, Asia Pacific, FTSE 100, and Emerging indices lagged the global benchmark.
Equity Europe ex UK (£818m, plus Equity Eurozone at £436m) and Equity Global ex UK (£644m) attracted most investor interest, so lumping the two former categories would make continental equities the second-most popular classification overall. Given the YTD outperformance, European investors have cottoned on to their charms faster than their UK peers, but the latter may be belatedly joining in.
The April rebound in US Software and Computer Services sectors continued in May and the rally broadened to other sectors particularly in Financials and Discretionary. Equity Sector Information Tech is just outside chart 4 (£313m), with Equity Sector Financials well down, if net positive (£81m), and Equity Sector Consumer Discretionary flows barely perceptible (£0.64m).
Largest Outflows
Chart 5: Largest Outflows by LSEG Lipper Global Classification, May 2025 (£bn)
Source: LSEG Lipper
Irrespective of returns, Equity UK (-£2.13bn, with -£1.51bn passive) suffers, along its siblings Equity UK Income (-£365m) and Equity UK Small & Mid Cap (-£215m).
Money Market GBP (-£2.06bn) and Bond Global Corporates USD (-£1.64bn, with -£1.42bn passive) were both down, which begs a question: it’s not just inflows that are higher in passive bonds, but outflows too. Is this, therefore, an investor response to volatile uncertain markets, with the main merit of these vehicles being that they are cheaper and often faster to get in and out of?
YTD, the Russell 2000 index was still in the red, reflected in the £352m redemptions from Equity US Small & Mid Cap.
Sustainable Fund Flows
Chart 6: Sustainable Asset Class Flows, May 2025 (£bn)
Source: LSEG Lipper
Net sustainable flows for the month were £334m, up from April’s £40m, albeit in a month of higher flows in general. Excluding MMF flows, conventional funds suffered outflows of £1.48bn.
Bonds were the most popular sustainable asset class in May, attracting £403m (11.9% of the flows to the asset class).
Source: LSEG Lipper
Sustainable MMFs came second (£77m, despite negative flows overall), followed by equities (£51m). The largest money taker was an Equity Emerging Mkts Global vehicle—unusual in a field dominated by Equity US and Equity Global offerings (see below).
Source: LSEG Lipper
Meanwhile, sustainable mixed-assets flows suffered redemptions of £196m, while their conventional equivalents shed £777m.
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, May 2025 (£bn)
Source: LSEG Lipper
BlackRock saw the largest inflows in May, netting £1.58bn, with £1.86bn to bond funds, £659m to mixed assets, but with outflows of ££731m to equity funds and £240m to alternatives. The company’s biggest money-taker (£1.24bn) was to a Bond Global USD ETF (see table below).
Source: LSEG Lipper
Federated Hermes comes second (£1bn), with flows dominated by MMFs (£998m).
Source: LSEG Lipper
