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Global ESG Funds see highest inflows on record, giving hope for active managers as equity funds overall suffers outflows in july

Fund Flow Index - August 2020

Equity funds suffered a second consecutive month of outflows in July, while fixed income funds enjoyed another month of strong inflows. Overall, equity funds shed £240m in July, but ESG and global funds proved to be successful.

Key highlights from this month's FFI:

  • Growing investor interest in ESG sees record inflows in July of £362m.
  • Each of the previous four months set a new record for ESG equity fund inflows, plus the total £1.2bn inflows into ESG since April is greater than all previous five years combined on record.
  • ESG equities buck the trend of outflows from equity funds overall in July, offering some relief to active fund managers – ESG funds currently the main area of real strength for active funds
  • ESG funds have accounted for one third of inflows to global funds overall in the previous year – as ESG funds are usually globally-focused
  • Global funds are also benefitting from investor preference for  “growth” rather than “value” holdings
  • Outflows from UK-focused funds and income funds are the other side of the same coin – on account of dividend suspensions, negative interest rates and unfavourable macro environment for “value stocks”