DFM demand for passives delivers chart-topping Q3 sales for Blackrock

Passives giant surpasses Liontrust and Baillie Gifford in the latest Pridham report

BlackRock Investment Management Company


Demand from wealth managers for passive funds helped push Blackrock up the top of the retail fund sales chart in Q3, according to the latest Pridham report.

The $9.5trn fund giant brought in £1.1bn worth of net sales in the three months to the end of September. On a gross basis, it was also top of the charts with £6.6bn in net inflows.

Though Blackrock has consistently led the pack in terms of gross sales, this is the first time it has topped the net sales chart this year.

See also: Blackrock tumbles out of top sellers as Baillie Gifford and Allianz GI dominate

Editor Helen Pridham said passive providers were continuing to benefit from strong demand from wealth managers.

For the second quarter in a row, the three highest gross sellers were passive providers, with Legal & General Investment Management and Fidelity behind Blackrock, with £3.3bn and £3.1bn of sales respectively.

Rising energy prices and staff shortages weigh on investor sentiment

Overall net retail sales declined in the third quarter, the report said. Historically sales tend to be stronger in the first and second quarters due to end of financial year tax planning and early bird Isa investors. But Q3 sales were even weaker in 2021 due to rising Covid infections, staff shortages and rising energy prices over the summer months made fund buyers more reluctant to splash their cash.

Pridham said the change in sentiment has dampened fund managers’ expectations about business levels for the rest of the year.

“Increasing nervousness about the impact of rising inflation and other concerns are affecting investors’ outlooks, though low interest rates are likely to continue to underpin fund sales,” she said.

Liontrust trails Blackrock and Fundsmith returns to top sellers

Despite wealth managers’ preference for passive products, active fund houses like Liontrust and Baillie Gifford posted some of the highest net retail sales.

Liontrust came in just behind Blackrock, with net inflows totalling £1bn, its highest quarterly net sales on record. Edinburgh fund house Baillie Gifford attracted a respectable £745.1m in Q3, though this was a far cry from Q1 when it leapt to the top of the charts after bringing in £2bn.

Elsewhere Terry Smith’s eponymous boutique Fundsmith returned to the table of top sellers, bagging £1.6bn in gross sales and £568.1m on a net basis. Though Smith’s flagship Fundsmith Equity fund has seen performance stumble this year, Pridham noted his consistent track record has continued to attract retail and professional investors “showing that it is not only charges they care about”.

Just behind Fundsmith, Rathbones posted its second highest quarterly net retail sales on record of £562.7m. This was driven by explosive sales into the £2.7bn Rathbones Ethical Bond fund, managed by Bryn Jones and Noelle Cazalis.


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