Terry Smith’s Fundsmith Equity suffered the fifth-worst net outflows of any UK-domiciled fund in March, according to Morningstar’s UK Fund Flows report, forming part of a £4.43bn sell-off of active strategies.
Smith’s (pictured) £23.5bn fund generated a return of 3.8% in March, and it is up nearly 7% year-to-date, but this did not deter investors from pulling net £176m over the same month. Between 1 January and 14 April, net £463m was withdrawn from the fund.
Morningstar’s report, which covers only UK-domiciled open-ended funds, and not ETFs, found Royal London bore the brunt of the month’s redemptions, and three of its strategies, including two short-term fixed income funds, were the worst hit by outflows.
Funds with largest net inflows and outflows
| March 2023 | YTD | Total assets | |
|---|---|---|---|
| Top | |||
| Royal London Short Term Money Market Fund | £279m | £360m | £5.4bn |
| HSBC FTSE All-World Index Fund | £236m | £595m | £3.0bn |
| iShares North American Eq Idx Fd (UK | £221m | £603m | £7.4bn |
| abrdn UK Sustainable and Resp Inv Eq | £199m | £198m | £0.25bn |
| Vanguard FTSE Dev World ex-UK Eq Idx Fd | £196m | £163m | £12.2bn |
| Bottom | |||
| Royal London Japan Equity Tilt Fund | -£861m | -£864m | £0.3bn |
| Royal London Short Term Fixed Inc | -£662m | -£745m | £4.5bn |
| Royal London Short Term Fixed Inc Enh | -£417m | -£475m | £1.7bn |
| iShares Overseas Govt Bd Idx Fd (UK | -£285m | -£242m | £3.0bn |
| Fundsmith Equity Fund | -£176m | -£463m | £23.5bn |
In all, net £1.4bn was pulled from Royal London’s UK-domiciled strategies, representing its second-largest outflow in over five years. The struggles also continued for Baillie Gifford, which suffered nearly £480m of redemptions.
Vanguard and BlackRock topped the table in terms of inflows for the month, with Abrdn and Legal & General also continuing to attract new money.
Estimated net flows for the top 10 Fund Groups (UK-Domiciled Funds)
| Fund groups | March 2023 | YTD | Total assets |
|---|---|---|---|
| BlackRock | £396m | £567m | £177bn |
| Aviva | £90m | -£377m | £78bn |
| Royal London | -£1,443m | -£928m | £66bn |
| Legal & General | £215m | £136m | £58bn |
| Abrdn | £267m | £352m | £51bn |
| Vanguard | £463m | £681m | £50bn |
| Fidelity International | -£97m | -£671m | £47bn |
| Schroders | -£38m | -£166m | £35bn |
| Baillie Gifford | -£479m | -£1,669m | £32bn |
| Columbia Threadneedle | -£229m | -£690m | £29bn |
In all, active funds have suffered redemptions of almost £8bn since the start of 2023, while investors have added £4.3bn to passives over the same period.
However, at £835bn, active funds still hold more than twice the assets than their passive peers.
Total estimated net flows
| March 2023 | YTD | Total assets | |
|---|---|---|---|
| Active | -£4.4bn | -£8.0bn | £835bn |
| Passive | £1.6bn | £4.3bn | £351bn |
All major asset classes saw withdrawals in March, according to Morningstar’s data. Money market funds came off worst, as investors pulled an estimated net £1.36bn, while equities and fixed income sustained withdrawals of £641m and £495m, respectively.
Investor appetite for fixed income has waned considerably since January and February, when the asset class experienced near-record inflows.
Global and US Large-Cap Blend Equity proved the most popular Morningstar categories of the month, receiving inflows of £966m and £777m, respectively, while the UK Large-Cap Equity, GBP Government Bond, and UK Equity Income categories were third, fourth, and fifth worst-hit by outflows.
See also: Investors pull £1.2bn from UK equity funds in March
