Bond Funds Reigned Supreme in July

The
trends
seen
in
July
largely
follows
what
we’ve
seen
so
far
this
year.
The
total
outflow
for
2023
has
now
surpassed
£11
billion,
and
it’s
again
equity,
followed
by
allocation,
that
have
accounted
for
the
lion’s
share
of
redemptions.
Fixed
income
has
so
far
attracted
£2.85
billion.
The
categories

Other
and

Money
Market
are,
unlike
in
July,
in
inflow
territory
–
but
barely.

Among
the
least
popular
Morningstar
categories,
we
find
two
drivers
for
the
large
outflows
from
equity
and
allocation:

Global
Large-Cap
Growth
Equity
and

GBP
Flexible
Allocation,
which
each
saw
more
than
£1
billion
redeemed
in
July.
This,
again,
was
down
to
two
funds
in
particular:

Fundsmith
Equity
(with
outflows
of
£727
million)
and

Schroder
Diversified
Growth
(with
outflows
of
£633
million).

These
two
Morningstar
categories
were
by
far
the
least
popular.
As
shown
by
outflows
from
the
third-hardest-hit
category: Property
–
Indirect
Global.
Its
outflows
were
half
of
those
seen
by
large-cap
growth
equity
and
GBP
flexible
allocation
at
£509
million.
And
the
above
two
funds
were
the
ones
with
the
largest
outflows,
too.
Fundsmith
Equity
has
now
surpassed
the
£1
billion
mark
for
outflows
in
2023.

It’s
not
all
about
the
outflows,
though.
Some
categories
have
remained
popular
this
year
too:

Global
Corporate
Bond
GBP-Hedged
and

GBP
Government
Bond
had
top
category
inflows
of
£546
million
and
£279
million,
with

HL
Global
Corporate
Bond
explaining
nearly
all
the
flow
in
the
former
(£529
million).

And
despite
the
unpopularity
of
equities,

Global
Equity
Income managed
to
secure
the
third-highest
inflows
of
the
month,
with
£256
million
in
July,
and
even
£684
million
this
year.

On
the
fund
house
side,
half
of
the
10
biggest
fund
groups
saw
outflows
and
the
largest
of
all,
totalling
£921
million,
belonged
to

Schroders.
The
redemption
brings
the
group’s
total
beyond
the
£1
billion
mark
for
the
year,
but
only
just
–
as
of
last
month,
the
fund
group’s
net
flows
stood
at
a
mere
£130
million. Baillie
Gifford
had
the
second-largest
outflows
at
£651
million.

Meanwhile,
at
the
other
end
of
the
spectrum,

Royal
London
attracted
£521
million.
As
the
fund
group
was
about
to
surpass
£10
billion
worth
of
outflows
for
2023
so
far,
these
subscriptions
have
helped
offset
some
of
its
medium-term
pain.

Most
of
the
funds
experiencing
redemptions
were
active
vehicles,
which
bled
£4.38
billion
over
the
course
of
July.
Meanwhile,
passives
saw
modest
inflows
of
£544
million.
For
context,
about
£825
billion
is
held
in
active
funds
in
the
UK,
while
£366
billion
is
in
passive. 

Finally,
there
is
one
more
trend
now
in
its
third
month:
sustainable-labelled
funds
suffered
outflows.
With
July’s
outflows
of
£1.16
billion,
the
yearly
net
flows
also
tipped
into
outflow
territory.
There
was,
however,
no
respite
for
those
choosing
to
stay
with
non-sustainable
labelled
funds,
as
these
funds
suffered
outflows
too.

A
note
on
methodology:

This
report
includes
only
open-end
funds
domiciled
in
the
United
Kingdom
but
not
funds
of
funds.
Where
an
open-end
fund
is
likely
to
have
a
large
institutional
footprint,
it
will
not
feature
in
the
calculations.
Assets
recycled
into
a
strategy’s
different
vehicle
such
as
a
segregated
mandate
are
catalogued
as
outflows
for
the
purpose
of
this
report.
Readers
may
wish
to
consider
this
nuance
when
deriving
conclusions
from
the
data.

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