Sustainable funds see outflows for first time since March 2020

According to its latest UK Fund Flows report, showing data and analysis of UK open-ended funds and ETFs, the sector saw £199m of net outflows in August.

However, this is just a small portion of the net total £27.1bn that has gone into sustainable funds over the past 12 months.

By comparison, funds non-ESG funds saw outflows of £3.6bn in August. This part of the market has not experienced positive flows over the past year with a total estimated net outflows of more than £38bn over the period.

Investors set to prioritise healthcare amid demographic shift

Equity funds took the biggest hit once again with huge outflows of £5.2bn, the highest monthly figure in over 10 years. Property funds also suffered from money leaving the sector with outflows of £111m while fixed income funds welcomed £1.9bn of net new money.

Overall, £3.4bn was redeemed from active strategies compared to just £56m from passive strategies. Looking over the past 12 months however, active funds have seen £4.5bn worth of net outflows while passive funds have seen net inflows of £3.3bn.

Looking at individual Morningstar categories, bonds led the way with the five largest net inflows all to fixed income sectors.

Global Flexible Bond – GBP Hedged funds topped the table with £444m of net inflows in August, followed by GBP Government Bonds (£419m), GBP Corporate Bond – Short Term (£280m), GBP Corporate Bond (£267m) and Global Bond (£255m) categories.

On the negative side, the largest outflows came from Europe ex-UK Equity with more than £1bn leaving the sector. Other laggards included Global Large-Cap Growth Equity (down £849m) and UK Large-Cap Equity (£474m outflows).

Of the top ten fund groups by assets, most saw outflows, with Baillie Gifford leading the way with almost £537m in redemptions, closely followed by BlackRock at £434m.

More than 1,500 Article 9 funds at risk of losing status

Only Legal & General, Fidelity and abrdn saw money come in in August with inflows of £62m, £181m and £63m, respectively.

On a fund basis, Fundsmith Equity and BlackRock European Dynamic continued to see high levels of withdrawals in August, totalling around £450m and £419m, respectively.

Winners during the month included the Allianz Strategic Bond and Jupiter Global Value Equity funds which saw inflows of £250m and £214m. Passive funds were also amongst the more popular with iShares UK Gilts All Stocks seeing £179m of net new money.