Flows into sustainable strategies slow as equities continue to suffer
Update
Net inflows into sustainable strategies cooled during July, as broader equities continued a trend of outflows, according to a recent Morningstar fund flows report.
Sustainable funds ended July in positive territory, though their net flows compared with non-sustainable counterparts tightened. Funds flowing into indexed sustainable strategies finished July at £251m. This comes after previously published data revealed that flows into sustainable equity funds dropped 62% in Q2 amid headwinds from market uncertainty.
Broader equities continued their run of outflows in July, though levels had slowed since May and June lows, with £2.7bn flowing out of equity strategies, adding to one-year outflows of £12.8bn.
It was a better month for fixed income, despite inflationary woes, as investors added £739m to fixed income funds. The report noted that ‘Fixed income strategies have benefited from net inflows over the last two years and continued their positive run despite the inflationary backdrop. Within this asset class, global corporate saw the largest new inflow for the month, followed by the GBP hedged version of this Morningstar category.’
Global equity income continued its five-month inflow streak, adding an extra £176m during July. The main beneficiaries for the year to date included active offerings Trojan Global Income, Fidelity Global Dividend, and Baillie Gifford Responsible Equity Income.
After its worst six-month opening on record, in which it saw $54.3bn exit its active mutual funds, and record monthly outflow in June, Vanguard's woes have steadied over a broadly flat July, with just £34m leaving the house. Flows were spread across the firm’s offering, with an £89m outflow from its FTSE Developed World ex-UK Equity Index fund described by Morningstar as the ‘most significant’. Vanguard's passive range continued to enjoy inflows, though these have recently turned more volatile.
Net flows for abrdn were relatively flat over the month, although the report highlighted two notable flows, with £139m entering its Corporate Bond Tracker fund, and its Global Absolute Return Strategy fund seeing £126m in withdrawals.
BlackRock saw its largest net outflow figure since 2018, with £1.6bn leaving Larry Fink's passive giant during July.