Stats from Morningstar show sustainable funds dominated UK flows once again in 2021, gaining £37.1bn compared with the total market net flow of £27.4bn.
Despite continued uncertainty amid the pandemic, and the emergence of the omicron variant towards the end of last year causing further market volatility, investors have continued to pour assets into sustainable funds as they align their portfolios with their personal values, and improve their understanding of how investments can help mitigate environmental and social negative impacts.
Morningstar’s UK Fund Flows Report said “sustainable funds ruled in 2021” pointing to the net flows being almost £10bn higher than the wider market total, and the top 10 most popular strategies featuring six funds featuring ‘climate’, ‘ESG’ or ‘sustainable’ in their name.
“Markets continued to be somewhat volatile in 2021 and despite rising yields in bond markets, fixed income funds experienced the most inflows by far,” report author Bhavik Parekh, manager research analyst at Morningstar, said. “However, the most significant trend of 2021 was the massive subscriptions into sustainable vehicles, which totalled £37.1bn, far more than the total market net inflow of £27.4bn. This can be seen in the highest subscribed funds of the year, notably four BlackRock trackers, which amassed £8bn between them in 2021 alone.”
Funds with largest net inflows 2021
|Fund name||Total estimated net flows 2021 (£m)||Assets (£m)|
|SPW MM Global Investment Grade Bond||3,282||3,296|
|PUTM Bothwell Global Bond Fund||3,253||3,578|
|Developed World Sustainable Equity Index||2,428||2,872|
|Blackrock ACS World ESG Equity Tracker||2,332||7,022|
|ACS Climate Transition World Equity Fund||2,280||4,855|
|Royal London EM Markets ESG Leaders Equity Tracker||2,237||4,060|
|Blackrock ACS World Low Carb Equity Tracker||1,807||5,333|
|ASI Global Corporate Bond Tracker Fund||1,770||6,525|
|Blackrock ACS Wld ESG Scrnd Equity Tracker||1,648||1,961|
|Baillie Gifford Managed Fund||1,639||9,021|
Alongside BlackRock, Royal London and Liontrust were highlighted as seeing “strong growth”, and Parekh commented on the latter “its sustainable future range has been a real boon to the business”.
Speaking about the overall asset manager inflows, Parekh said: “At the fund group level, Royal London, helped by inflows from other areas of its business, achieved a £4.5bn net inflow, followed closely by Baillie Gifford with £4.4bn. Vanguard continued to see strong growth as did Liontrust – its sustainable future range has been a real boon to the business. On the other hand, Invesco keeps its title of least-popular fund group from 2020, having only narrowly missed out in 2019.”
Fund groups with largest net flows 2021
|Group name||Total estimated net flows 2021 (£m)||Assets (£m)|
|Scottish Widows Schroder||3,565||15,614|
|Legal & General||2,374||58,498|
The report also noted active strategies had higher inflows than their passive counterparts for the first time since 2014 helped by sustainable and allocation strategies.