Sustainable Equity Flows Dry Up,
Driving Poorest Total for Green Funds
- Net flows: Sustainable flows posted their third consecutive negative quarter
(-£10.59bn) and their worst ever quarter by a considerable margin.
- Equities: Q3 saw the largest ever redemptions from sustainable equity funds
(-£9.99bn), with £11.45bn redeemed from one fund share class.
- Equity US was the most popular sustainable classification in Q3, attracting £4.84bn, and is also the best-selling classification YTD.
- Equity Global saw the largest redemptions in Q3 (-£16.82bn, versus +£3.38bn for conventional funds of this classification).
- SDR: Net aggregate redemptions to SDR funds YTD were £3.77bn, an increase from Q1’s outflows of £2.89bn.
Sustainable Asset Class Growth
Chart 1: Sustainable Asset Class AUM, 2015 to Q3 2025 (£bn)
Source: LSEG Lipper
UK sustainable assets held in mutual funds and ETFs rose from £230.91bn to £234.64bn (101.61% of their FY 2024 value) since the start of the year, while total UK mutual fund and ETF assets rose by 101%. Sustainable assets, as defined by Lipper, make up 9.42% of the UK mutual fund and ETF market.
Equity funds make up most sustainable assets, at 72.19%, followed by bond (13.37%), mixed assets (12.61%), and money market funds (MMFs) (1.27%). Alternatives and real estate funds make up less than 0.5% each of sustainable assets.
Equities have taken a greater market share over the past five years, particularly at the expense of mixed assets, then bonds. However, all have grown considerably in absolute terms.
Sustainable Asset Flows
Chart 2: Five-year quarterly flows, to Q3 2025 (£bn)
Source: LSEG Lipper
Sustainable flows posted their third consecutive negative quarter (-£10.59bn) and their worst ever quarter by a considerable margin.
This was largely down to the largest ever redemptions from sustainable equity funds (-£9.99bn). Some £11.45bn was redeemed from one share class in Q3, implying a significant call by one, or a group of, large institutional investors. If one excludes this redemption, equity flows are net positive for the quarter and YTD, as are total net flows. But that is a pretty big “if”.
Bonds also suffered their third consecutive quarter of redemptions (-£949m YTD, with the largest outflows in Q2). Sustainable mixed assets also saw their largest quarterly outflows (-£362m, compared to -£264m in Q3 2023).
Sustainable versus Conventional
Flows by Asset Class
Chart 3: Asset Class Flows, Sustainable v Conventional, Q3 2025 (£bn)
Source: LSEG Lipper
Other than in equity outflows, there is not a lot of visible green in chart 3. And most of the green is, indeed, in the red, with just money market funds (MMF) and real estate seeing net inflows for the quarter.
Over Q3 2025, sustainable funds outflows (-£10.59bnm/-£10.23bn ex-MMFs) were exceeded by that of their conventional peers (-£26.94bn total/-£26.86bn ex-MMFs).
Sustainable MMFs took £128m, as their convention peers attracted £2.73bn. Sustainable real estate saw inflows of £6m, with their conventional equivalents shedding £407m.
Meanwhile, sustainable alternatives saw outflows (-£16m/+£1.42bn conventional), as did bonds (-£357m/+£1.49bn conventional), and mixed assets (-£362m/-£104m conventional). The largest move was for sustainable equity (-£9.99bn/-£32.1bn conventional).
Chart 4: Asset Class Flows, Sustainable v Conventional, YTD 2025 (£bn)
Source: LSEG Lipper
A not dissimilar picture to Q3 flows for YTD.
Responsible investment funds saw outflows of £11.35bn YTD (-£10.4bn ex-MMFs). This compares to outflows of £25.6bn (-£19.98bn ex-MMFs) for their conventional peers.
MMFs’ £265m inflows were in the same direction as the £9.03bn for the asset class’s conventional flows, while sustainable real estate netted £59m despite the £1.11bn redemptions for conventional property.
On the debit side of the ledger, sustainable alternatives shed £60m (+£1.07m conventional), mixed assets saw redemptions of £239m (-£2.52bn), and bond outflows were £949m (-£6.28bn conventional).
Sustainable equity’s large Q3 outflow put YTD flows at negative£10.43bn (-£26.45bn conventional).
Sustainable Flows by Classification
Largest positive flows
Chart 5: Largest Positive Sustainable Flows by LSEG Lipper Global Classification, Q3 2025 (£bn) Versus Conventional Equivalents
Source: LSEG Lipper
As was the case in Q2, Equity US was the most popular sustainable classification in Q3, attracting £4.84bn. This is despite the overall redemptions for the classification (-£22.62bn)—the result of the largest ever redemptions for Equity US in the UK over July.
This was followed, once more, by Equity Emerging Markets Global (£777m) despite headwinds for the classification’s conventional funds (-£520m). Despite YTD outperformance, European equities have not proved the natural alternative to their US peers tipped earlier in the year. They have, however, attracted assets (+£560m/+£199m conventional).
Sustainable Equity Japan (+£354m) and Equity Asia Pacific ex Japan (+£226m) both attracted assets despite significant redemptions for the classifications’ conventional funds.
Equity Sector Real Estate Global (+£180m) made the top 10 despite seeing Q2’s largest redemptions.
Bond Global Corporates USD was the most popular fixed income classification of the quarter (+£641m/ +£112m conventional).
Chart 6: Largest Positive Sustainable Flows by LSEG Lipper Global Classification, YTD 2025 (£bn) Versus Conventional Equivalents
Source: LSEG Lipper
Equity US funds were the most popular sustainable classification YTD (£6.32bn/-£13.98bn conventional).
As a result of another robust quarter, Equity Emerging Markets Global followed, at some distance, netting £1.56bn (-£670 conventional), then Bond Global Corporates USD, which attracted £981m despite redemptions of £1.75bn for conventional equivalents.
Sustainable Equity Europe ex UK (+£812m), Equity Japan (+£411m), and Equity Asia Pacific ex Japan (+£337m) all enjoyed inflows despite net flows for each classification being in the red YTD.
Largest negative flows
Chart 7: Largest Negative Sustainable Flows by LSEG Lipper Global Classification, Q3 2025 (£bn) Versus Conventional Equivalents
Source: LSEG Lipper
In a total sea change from Q2, Equity Global saw the largest redemptions in Q3 (-£16.82bn/+£3.38bn conventional), to no small degree as result of outflows from one share class (see p5).
Bond GBP Corporates saw the heaviest fixed income outflows (-£1.19bn/-£2.08bn conventional).
Mixed Asset GBP Aggressive – Global (-£191m) and Mixed Asset GBP Balanced – Global (-£181m) both suffered outflows despite the positive fortunes over the quarter of these classifications.
It’s worth a footnote that while Equity Theme – Alternative Energy flows are still negative (-£52m), this is a significant reduction on the trend over the recent past.
Chart 8: Largest Negative Sustainable Flows by LSEG Lipper Global Classification, YTD 2025 (£bn) Versus Conventional Equivalents
Source: LSEG Lipper
Poor Q3 flows mean that Equity Global also sees the heaviest outflows YTD (-£1.6bn/+£14.39bn conventional). And, a mildly positive Q3 notwithstanding, Equity Sector Real Estate Global is still next to the bottom of the pile YTD (-£1.95bn/-£417m conventional).
In line with Q3, Bond GBP Corporates suffered the heaviest fixed income redemptions (-£1.46bn/-£4.73bn conventional), with Bond Global Corporates GBP also selling off (-£959m/-£9.84bn conventional).
While sustainable Equity UK had an indifferent quarter—that is, better than its conventional peers—it is still struggling YTD despite outperforming global and US equities over the period (-£1.27bn/-£11.45bn conventional).
Active versus Passive
Chart 9: Sustainable Bond (LHS) and Equity (RHS) Active v Passive Asset Class Flows, 10 Quarters to Q3 2025 (£bn)
Source: LSEG Lipper
In fixed-income terms, Q3 2025 sees a recurrence of what we saw in Q2 2023 and Q3 2024, with inflows to sustainable active strategies (+£604m) and outflows from passives (-£961m). It’s rare that we see a reversal of this—something which tends to be the case with bond funds in general, where the market has followed the equity trend of rotating from active to passive. Over the YTD, passive bond funds have seen redemptions of £980m, while active funds have netted £31m.
Over Q3, sustainable passive and active equity strategies both suffered significant redemptions (respectively, -£5.16bn and -£4.83bn). YTD, those figures are negative £6.37bn and negative £4.06bn.
Flows by Asset Manager
Chart 10: Largest Positive Sustainable Flows by Promoter, YTD 2025 (£bn)
Source: LSEG Lipper
Legal & General tops the table over the first three quarters of the year (+£1.24bn), with £720m of sustainable equity, £389m of bond, and £139m of mixed-assets inflows. It is the top-selling asset manager for both equity and bond.
HSBC comes second (+£890m), buoyed by equity (+£657m) and MMF (£256m).
Schroders is the top-selling manager for sustainable mixed-assets funds YTD (+£562m).
SDR: AUM and Flows
Chart 11: SDR Categories AUM YTD 2025 (£bn)
Source: LSEG Lipper
LSEG Lipper records £28.01bn of assets in these funds, slightly up on Q3’s £27.25bn, as market growth exceeded net redemptions: Sustainability Focus, £22.11bn (78.93%); Sustainability Impact, £2.76bn (9.85%); Sustainability Improvers, £2.19bn (7.82%); and Sustainability Mixed Goals, £0.95bn (3.4%).
Chart 12: SDR Categories Net Flows by Asset Class, YTD 2025 (£bn)
Source: LSEG Lipper
Net aggregate redemptions to SDR funds YTD were £3.77bn, an increase from Q1’s outflows of £2.89bn. Sustainability Focus funds suffered worst, with outflows of £2.87bn (bonds -£205m; equity -£2.04m; mixed assets -£618m). All asset classes within Sustainability Focus, therefore, suffered outflows over Q3.
Sustainability Impact funds saw net outflows of £926m (bonds -£16m; equity -£928m; and real estate -£14m).
Sustainability Improvers saw redemptions of £76m YTD (equity -£79m; mixed assets +£3m).
Sustainability Mixed Goals was the only classification to see net inflows YTD. Albeit with a slight diminution over the quarter, of £105m, all to mixed-assets funds.
Note that this report has narrowed its focus from broad Sustainable funds—those which indicate some form of Sustainable strategy in their fund documentation—to a smaller set of sustainable funds, defined as all SFDR Article 9 funds plus Lipper Responsible Investment Attribute funds reduced to those containing indicative sustainable keywords in the fund name.
