Pridham Report: ‘Bruising’ 2023 sees record outflows for UK fund industry

BlackRock tops gross and net annual flows for 10th consecutive year

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The UK fund industry suffered its worst year on record for net outflows in 2023, according to the latest Pridham Report.

ESG-focused funds recorded their first ever year of net withdrawals.

On a more positive note, gross annual flows were up on 2022, though they remained below the levels recorded in 2020 and 2021.

Passives dominate inflows

BlackRock attracted the most net new business for the 10th consecutive year, pulling in £30.1bn gross retail sales and £6.4bn annual net flows.

Legal & General Investment Management also posted a strong year with a 26% rise in gross sales compared to 2022. It attracted £3.1bn net new business.

Fidelity and HSBC, meanwhile, also recorded strong net and gross flows. Between the four firms, 71% of new flows went into passive offerings.

Royal London Asset Management was the top ranked active fund manager for both gross and net sales. While in previous years it has seen the highest inflows into its sustainable funds, in 2023 its best sellers were short dated fixed income and money market funds.

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M&G and BNY Mellon were new entrants to the top ten for gross new business after annual sales growth of 90% and 22% respectively.

M&G’s Japan and Emerging Markets Bond funds ranked among the best-selling retail funds over the year, while BNY Mellon’s Multi-Asset Balanced fund also received significant attention from retail investors.

Report editor Anna Pridham said: “Gross sales show that established groups like Schroders, Jupiter, BNY Mellon, and JPM are attracting significant new flows. However, as mature businesses, they also contend with high levels of natural outflows and switches.”

In terms of Q4 flows, most leading managers recorded a rise in gross sales compared to the previous three months.

Pridham noted that, against a backdrop of an impending general election in the UK and ongoing economic uncertainty, the outlook for asset managers in 2024 remains uncertain.

“However, with the prospect of easing inflation and anticipated interest rate cuts, investors may be finally ready to deploy the record amounts of cash waiting in the wings. The fund groups with the right products stand to benefit,” she said.

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