Passives take 70% of net fund inflows in Q2

Global instability saw a surge in investors putting money into passive funds, with 70% of UK net fund inflows into passives in Q2, according to new data published today by platform consultant Fundscape.

Fundscape said that in Q2 investors responded to a quarter marked by, “geopolitical tensions, higher gilt yields and political uncertainty.”

Despite the challenges investors were still willing to invest. UK funds pulled in £4.6bn of net inflows during the quarter, with passive strategies making up £3.2bn of those flows. Active funds attracted £1.4bn. 

Fundscape said the shift to passives was underlined by figures for the month of June which revealed that passive funds took £1.7bn while active managers took barely £45m.

Gross activity showed a better picture for active funds with active funds at £10.3bn against passive's £7.6bn, but Fundscape added, “withdrawals from active strategies were higher and passive flows much stickier.”

Fundscape said Q2 was a “noisy quarter” with the US-Israeli war on Iran, an oil spike and gilt yields at an eighteen-year high, capped by Keir Starmer's resignation as Labour leader in late June and Andy Burnham stepping in. 

BlackRock led overall net flows with Quilter topping the active rankings, Fundscape data showed.

Source: Fundscape Q2 data 

Gross flows

Source: Fundscape Q2 data  

 Source: Fundscape Q2 data 

Vanguard, BlackRock and LGIM dominated gross activity in June and the quarter. On the active side, several fund manager have consistently attracted investors, Fundscape said. These include: RLAM, Orbis and Artemis. Fundscape said while RLAM was often seen as a short-term money market and credit duration play, its Sustainable World and Sustainable Leaders funds were enduringly popular.

At Artemis, investors were drawn to income on one hand and equity on the other with its SmartGARP Global, European and Global Emerging Market funds drawing attention. Orbis’s multi-asset products continued to attract adviser support for “robust and consistent performance.”

 Source: Fundscape Q2 data 

 Source: Fundscape Q2 data 

For net flows, Quilter topped the active table in June and the quarter, with HSBC and Orbis the other names to feature. BlackRock led the all-funds table in both periods, with Amundi close behind over the quarter on the strength of its core bond and index ranges. 

Bella Caridade-Ferreira, head of insight at FE fundinfo and Finscape Lead said: “There was a lot of geopolitical and domestic noise in the second quarter, with the World Cup and other sporting events adding some colour and hope. Unfortunately, football didn’t come home, but with Andy Burnham taking over as UK Plc’s manager, it will be interesting to see whether investment trends remain the same or are substituted in the second half of the year.”

Finscape is part of FE fundinfo.