Outflows from UK-domiciled funds totalled £1.27 billion in August, a month which saw smaller aggregate movements than in the past few months. But all the major asset classes struggled.
Only Money Market and Other had inflows, of a few hundred million each, last month. Equity has struggled throughout the year and it took the biggest hit in August too, passing the billion mark to hit £1.46 billion – but this remains smaller than the outflows seen in both June and July. The year-to-date outflows for the category are now at almost £20 million.
Fixed income has acted as a bit of a counterweight to equity strategies this year, but for the second time this year, these strategies suffered a blow as investors withdrew £135 million.
Three of the five worst-performing Morningstar categories were all equity categories, and UK Equity Income had the largest redemption of these, at £528 million.
But simultaneously, there were three equity categories in the top five for inflows. Overall, subscriptions to Global Large-Cap Blend Equity were the highest, at £738 million. US Large-Cap Blend Equity and Japan Large-Cap Equity also did well.
It was GBP Flexible Allocation that had the highest outflows of the month with £564 million, but as with equity categories, allocation managed to get one group in the top five too: GBP Allocation 80%+ Equity.
Author of the report, Morningstar associate analyst Jack Fletcher-Price, notes that the three largest category level net redemptions in August were all in categories with the top year-to-date outflows.
The trends we've seen so far this year – of assets moving from active to passive strategies – persisted in August. Three index funds featured on the list of top inflows for August, and three active funds were among those with the most outflows. In total, passive strategies attracted £2.28 billion in August (£13.30 billion in 2023 so far) and active strategies bled £3.55 billion (£28.3 billion in outflows this year).
Among the top 10 fund groups in the UK, HSBC saw the largest net inflow in August, reaching £814 million – bringing its 2023 inflows to £2.55 billion. It was followed by Vanguard and Legal & General, with £289 million and £288 million, respectively.
Baillie Gifford, Fidelity, and Abrdn had the largest redemptions: £500 million for Baillie Gifford and £158 million for Abrdn. In 2023 so far, it’s still BlackRock that’s been the most popular, attracting £10.12 billion, and Royal London the least popular. Investors withdrew £8.79 billion from the latter's products.
Finally, there was good news for sustainable strategies. Funds considered "sustainable" by their parent companies returned to inflow mode after three months of net redemptions. These funds are still in net outflow territory on the year, however, with £763 million removed, but August subscriptions worth £397 million helped compensate.
In contrast, funds not considered sustainable suffered £2 billion in outflows in August alone, and the yearly figure now shows investors have redeemed £15 billion from these funds.
