Equity markets rallied strongly in mid-April on the announcement of a ceasefire following a sharp sell-off in March, according to LSEG Lipper’s recent monthly report.
Net flows for April 2026 were up £2.7bn, but this masks a dismal £2.2bn outflow from active funds. Meanwhile, passive funds surged £4.9bn.
This pivot towards passives was particularly clear in the equity asset class, which posted its first positive net flow of the year at £371m. However, this was driven almost entirely by passive funds, which climbed £2.5bn, while active funds lost money.
Within the equity asset class, global ex-UK equity attracted the largest inflows in April (£3.4bn), almost entirely into passive vehicles. On top of this, the inflow was almost solely to a single passive fund, the report noted.
“This was the clearest example of the active-to-passive rotation within equities, with investors favouring broad global exposure while continuing to redeem from active equity funds.
“Equity global [without the ex-UK] is generally where we see the global equity heavy action, so it’s not too surprising to see £3.2bn of this going to one passive share class.”
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The report also drew attention to the £120m redeemed from emerging market equity funds, despite strong performance in the past year and over recent months. Equity Japan and Equity Asia Pacific ex Japan saw outflows of £714m and £469m, respectively, despite achieving decent returns on average.
Bond funds experienced a similar but less stark rotation, with passive bond funds attracting £1.9bn, but actives also contributed.
The only area where this wasn’t the case was in multi-asset funds, which dominated inflows for the month at £3.1bn. Active funds were the clear winner of the batch, surging by £2.9bn, reinforcing the demand for mixed asset strategies after March
Shifting focus to fund promoters, Vanguard led sales in April, having attracted £3.8bn in assets dominated by equity and bond funds, both of which attracted more than £1bn in new money.
Legal & General and HSBC followed, attracting £1.1bn and £1.1bn respectively in April.
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Year to date
Flows for the year have generally reflected these trends, with a strong bias towards passive funds across asset classes.
Net flows have come in at £4.2bn, driven by a £6.5bn surge in passives.
“Equities remained the clearest area of active-to-passive rotation,” the report said.
“The asset class is still negative year to date (-£4.5bn), but this masks sharply divergent flows: active equity funds have shed assets (-£9.4bn), while passive equity products have attracted £4.9bn.”
The report continued: “Bond funds were negative overall (-£452m), as active redemptions (-£259m) and passive outflows (-£193m) both weighed on the asset class despite April’s strong monthly rebound.”
Mixed asset funds were again the biggest winners so far this year, much like they were in March, attracting £9.5bn year to date.
Mixed Asset GBP Aggressive – Global funds, dominated fund flows according to LSEG Lipper, attracting £7.8bn in total, of which £7.7bn came from active strategies.
The other big asset class supporting active funds so far this year were alternatives, which surged £2.1bn, all of which was due to active fund strategies.
“Alternatives are likely attracting investor interest as geopolitical uncertainty plus an increasing mindfulness of downside risk in key equity markets make strategies offering downside protection all the more attractive,” the report said.
LSEG Lipper also noted UK funds faced persistent pressure, with Equity UK funds, UK income funds and UK mid-caps and small caps funds all down by more than £1bn so far this year.
Meanwhile, in terms of fund promoters, Vanguard once again led on inflows with a £6.8bn inflow, mostly accounted for by a £4.8bn surge in equity funds. HSBC and Amundi followed closely behind, up £3.4bn and £3bn for the year.
Schroders, meanwhile, added £2.7bn for the year overall, which has been almost entirely due to the almost £5bn that poured into its mixed asset funds. By contrast, its equity, bond, multi-asset, money market and alternative funds all experienced redemptions.
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