February pushed the value of ETFs listed on the London Stock Exchange past the £1trn mark with net inflows of £6.4bn for the month, according to a report by LSEG.
Equities dominate the ETF market with over £802bn in assets, followed by bonds with £213bn. However, while equity funds brought in £8.8bn over the month, bonds bled £1.7bn.
Dewi John, head of research at LSEG Lipper for UK and Ireland, commented: “Equity funds saw the greatest growth in percentage terms on a month-on-month basis (6.6%), growing 28.4% year over year. Conversely, mixed-assets ETFs where once more the main negative movers, albeit from a low base.”
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Equity global and equity US were the top sellers for February, bringing in £4.7bn and £2.9bn respectively. The iShares Core MSCI World UCITS ETF USD attracted the biggest flows for equity global at £1.2bn, while equity US was led by the SPDR S&P 500 UCITS ETF Dist, at £1bn.
“The main beneficiaries of global flows were plain vanilla passives, with the exception being an ESG “enhanced” index product,” John said.
The equity US JPM US Research Enhanced Idx Eq ESG UCITS ETF USD A brought in £429m while the equity global iShares MSCI World ESG Enhanced UCITS ETF USD Acc gained £354m.
Sustainable products in total saw £1bn in flows, made up of £802m in equities and £199m in bonds.
“Some £163.3bn of ETF assets on the London Stock Exchange are defined by Lipper Research as sustainable, up from £156.9bn in January. The bulk (83.3%) are equity, with 16.8% in bond vehicles. That latter figure is slightly down on the previous month’s, despite stronger absolute inflows. However, note that sustainable bond flows are positive, in contrast to the significant negative flows for the asset class overall,” John said.
“Flows mirrored the wider market, with investors favoring Global and US equity ETFs, with the £336m to a Bond Global Corporates EUR being the only divergence from the month’s trend. What’s noteworthy is that three of the five top-selling sustainable ETFs are “researched enhanced”, that is, not pure index products.”
Active funds still make up just 1.6% of total net assets for ETFs on the London Stock Exchange, at £16.4bn. The area continues to see inflows, however, bringing in £644m in February after £484m in January. Active fund flows are led by the equity US JPM US Rsrch Enhncd Idx Eq ESG UCITS ETF USD A, attracting £429m. Just one of the 18 ETFs launched in February was an active fund.
