ETFs on the London Stock Exchange ended the year with more than £987bn under management after bringing in an additional £10.8bn in net flows during the month of December, according to LSEG Lipper’s UK ETF market report.
US equities were the champion of inflows for the month, bringing in £3.9bn, followed by global equities at £2.7bn. All five of the best performers for inflows during the month were in equity sectors, including Europe, eurozone and Japan.
Dewi John, head of UK and Ireland research at LSEG Lipper, said: “Equity Global and US have rotated as best-selling classifications, and in December it was again the US’s turn, nudging Global off the top spot.
“The US has been the best performing market over the year. However, if we combine Equity Europe and eurozone, European equity sales take second place, attracting £2.93bn.”
While equities inflows totalled £10.2bn on the month, bonds, which make up 21.18% of the ETF assets on the exchange, brought in just £645m for the month in total. In November, bonds increased £3.74bn.
Bond USD Government had the largest outflows of a single sector, losing £1bn in December, near double the amount of the second-worst performer, Equity Sector Energy.
“Despite the relatively attractive yields in a world of tight spreads, investors have moved elsewhere,” John said. “One could cite the weakening greenback, but that hasn’t stopped the rush to Equity US, so it seems more reflective of a repositioning to risk assets following earlier positive flows.”
Active ETFs, while only accounting for 0.9% of the net assets listed on the LSE, brought in £544m in the final month of the year. In comparison, passive ETFs had inflows of £9.7bn.
Sustainable funds as constituted by Lipper, which includes “all SFDR Article 9 funds plus all Lipper Responsible Investment Attribute funds reduced to those containing indicative sustainable keywords in the fund name”, make up £158.4bn of ETF assets on the LSE. This group brought in £3.8bn in equity ETFs and £660m in fixed income.
“Flows mirrored the wider market, with investors favouring US, Global, and European sustainable equity ETFs,” John said. “The three top-selling sustainable bond ETFs were all Bond EUR Corporates, collectively netting about £650m.”
By company, BlackRock attracted more than double the inflows of any other, totalling £4.8bn, which was still a drop-off from the £6.3bn in November. BlackRock was followed by DWS with £2bn and Vanguard with near £1.5bn. Six new ETFs were launched in December, with three from DWS and one each from Global X, Hanetf, and Wisdomtree.
