Risk Assets Start the Year in Negative Territory
Asset class
- Net flows 25 were -£3.89bn, or -£5.17bn excluding money market funds (MMFs).
- MMFs were the best-selling asset class (+£1.28bn), as equities saw the heaviest redemptions (-£3.67bn).
Active v passive
- Passive mutual funds saw redemptions of £6.45bn, as ETFs attracted £1.78bn.
- Tracker bond mutual funds saw outflows of £4.49bn, as their ETF peers attracted £1.09bn
Classifications
- Money Market GBP once again attracted most assets (+£1.28bn), as it did for seven months of 2025.
- Bond Global USD sold off heavily (-£3.17bn), skewed by a £5.28bn redemption from one tracker fund.
Sustainable fund flows
- Sustainable funds saw inflows of £1.26bn, in contrast to £5.15bn of redemptions for their conventional peers.
- Sustainable bonds fared best (£800m), despite the redemptions suffered by conventional equivalents (-£2.56bn).
Asset manager
- HSBC had the largest inflows over the month, netting £4.99bn, more than four times that of the next nine companies.
Flows by Asset Class
Three-Year Flows
Chart 1: Asset Class Flows, 36 Months, to January 2026 (£bn)
Source: LSEG Lipper
Geopolitical tensions rolled on over January: Greenland, Iran, renewed tariff threats, causing further dollar weakness… Despite this, macro conditions were broadly supportive of markets. Key indicators, such as Purchasing Managers’ Indices, were generally positive across major economies, signalling strengthening economies. US third‑quarter GDP growth held steady, as unemployment ticked lower, and job vacancies increased, pointing to early signs of labour‑market stabilisation.
While inflation accelerated in the UK due to seasonal factors, US headline CPI was flat, and remained close to target in the Eurozone. China, however, recorded monthly price declines, deepening worries over structural deflation linked to excess capacity and weak wage growth. Most major central banks, including the Federal Reserve, Bank of Japan, and Bank of Canada, kept interest rates unchanged.
Risk assets benefited from the backdrop. Equities advanced, particularly outside the US, with the FTSE in particular continuing its upward trend. This, however, hasn’t supported flows, with Equity UK the second-most unpopular fund classification by net flows
(-£857m). Indeed, equity flows in general abandoned their brief visit into positive territory in December to resume their trend of net redemptions, with outflows of £56.56bn since January 2025. Excluding MMFs, the asset class that has gathered most assets over the period is alternatives (+£2.59bn), followed by mixed assets (+£1.91bn). Bonds have barely broken even (+£625m), and the stand-out success in assets gathering over the 13 months have been MMFs (+£22.8bn).
Active versus Passive
Chart 2: Asset Class Flows, Active and Passive, January 2026 (£bn)
Source: LSEG Lipper
Net flows for January 2025 were -£3.89bn (+£781m active/-£4.67bn passive). Excluding MMFs, those figures are -£5.17bn (-£556m active/-£4.62bn passive).
MMFs were the best-selling asset class, netting £1.28bn. Mixed assets came next, albeit at some considerable distance (+£134m: +£56m active/+£78m passive—an unusual pattern in what’s normally considered an active-dominated asset class). Alternatives follow (+£118m: +£112m active/+£6m passive), then commodity (+£30m, all active).
On the negative side of the ledger, equities reversed a positive December to post £3.67bn redemptions (-£2.38bn active/-£1.29bn passive), followed by bonds (-£1.76bn: +£1.65bn active/-£3.41bn passive). The latter, again, sees a reversal of the active to passive trend in fixed income, and not for the first time. Possibly investors are being more picky about where they are placing their fixed income bets. However, there is a significant caveat here, as the pattern this month is heavily skewed by one large redemption from a single bond tracker (see chart 5).
ETFs and Passive Mutual Funds
Chart 3: Passive Asset Class Flows, Mutual Funds v ETFs, January 2026 (£bn)
Source: LSEG Lipper
Passive mutual funds saw redemptions of £6.45bn, as ETFs attracted £1.78bn over the month. As you can see, there isn’t much activity at the left-hand, positive side of the table, with mixed asset mutual funds taking £78m.
However, from the right-hand side, bond mutual funds saw outflows of £4.49bn, as their ETF peers attracted £1.09bn. Equity mutual funds shed £1.93bn, as equity ETFs netted £638m.
Flows by Classification
Largest Inflows
Chart 4: Largest Positive Flows by LSEG Lipper Global Classification, January 2026 (£bn)
Source: LSEG Lipper
Money Market GBP once again attracted most assets (+£1.28bn), as it did for seven months of 2025, including throughout Q4. Almost all flows were to active funds.
In equity markets, Asia Pacific, Emerging, Russell 2000, Japan, FTSE 250, FTSE 100, and Eurozone indices beat FTSE All-World, while Russell 1000 trailed in January.
Source: LSEG Lipper
Equity Emerging Markets Global netted £1.02bn (+£223m active/+£794passive) and has attracted £2.68bn over 12 months, and was the tenth most popular classification over 2025. As investors become more wary over the US market, amplified by slackening performance over the past year, they are seeking alternatives. While EMs may not seem that obvious a substitute for the quintessential DM, many have been running significant underweights to the former for some considerable time, and the current market seems to offer an opportunity to advantageously rebalance.
Source: LSEG Lipper
In December, Bond Global Corporates GBP suffered the heaviest redemptions, but has bounced back in January (+£728m: +£337m active/+£391m passive). Other bond classifications that proved popular included Bond GBP Government (£517m), Bond Global Corporates USD (+£267m), and Bond Global Short Term (+£230m).
While high-yield performance has been rather robust, flows have been rather anaemic, so it’s interesting to see Bond Global High Yield GBP (+£193m) and Bond Global High Yield USD (+£132m) pick up over the month, with flows favouring active strategies.
And, while real estate has been out of favour over years, and despite net redemptions for the asset class over the month, Equity Sector Real Estate Global attracted £157m—all and more of this being active money.
Largest Outflows
Chart 5: Largest Outflows by LSEG Lipper Global Classification, January 2026 (£bn)
Source: LSEG Lipper
Bond Global USD sold off heavily this month (-£3.17bn: +£867m active/-£4.04bn passive). This, however, is skewed by a £5.28bn redemption from one Bond Global USD tracker fund.
Next follows Equity UK, despite continuing positive performance (-£857m: -£546m active/-£311m passive). Equity selling looked rather broad based over the month, with seven of the 10 classifications in chart 5 being from the asset class. Aside from the UK, Equity US (-£759m), Equity Europe ex UK (-£750m), Equity Global ex UK (-£428m), Equity Japan (-426m), and Equity UK Income (-£394) all suffered damage. And, while APAC markets were top performers this month, Equity Asia Pacific ex Japan also saw significant redemptions (-£478m: -£269m active/-£2.09m passive) and has shed £5.14bn over 12 months.
Along with Bond Global USD, Bond USD Government sold off (-£335m). While it’s tempting to attribute this to ongoing USD weakness, USD corporate funds have sold well this month. Bond Europe also saw redemptions (-£325m), as did Bond GBP Corporates (-£271m).
Sustainable Fund Flows
Chart 6: Sustainable Asset Class Flows, January 2026 (£bn)
Source: LSEG Lipper
Sustainable funds saw inflows of £1.26bn, in contrast to £5.15bn of redemptions for their conventional peers, reversing December’s trends.
Sustainable bonds fared best (£800m), despite the redemptions suffered by their conventional equivalents (-£2.56bn). As can be seen from the table below, Bond Global Corporates GBP and USD faired particularly well over the month.
Source: LSEG Lipper
Similarly, sustainable equities attracted money (+£596m), as conventional funds saw outflows (-£4.26bn), with Equity Global funds being obvious beneficiaries, despite modest overall outflows for the classification.
Source: LSEG Lipper
Sustainable funds have yet to regain their favoured status in the mixed-assets universe, with redemptions of £123m, despite net inflows of £257m for their conventional peers.
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 SDR and 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, January 2026 (£bn)
Source: LSEG Lipper
The top 10 fund promoters attracted £6.2bn over January, as the market overall suffered significant redemptions.
HSBC had the largest inflows over the month, netting £4.99bn, more than four times that of the next nine companies. This was predominantly to MMFs (+£2.1bn) and bond funds (+£2.03bn).
Source: LSEG Lipper
Northern Trust followed, with inflows of £929m, split between MMF sales (+£432m), and bonds (+2744m) and equities taking £223m.
Source: LSEG Lipper
