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Vaccine optimism sees equity fund inflows surge to 5-year high in Q4

Fund Flow Index - January 2021

Inflows to equity funds surged to £2.4bn in December. This was the second-best month on record and took the Q4 total to £4.6bn, its highest since mid-2015. For the whole of 2020, equity inflows were £7.5bn, almost four times as great as in 2019.

Key highlights from this month's FFI:

  • Equity funds enjoyed £4.6bn of inflows in Q4, the highest since 2015; December was the second-best month on record for equity funds
  • 2020 ended with a sharp improvement for active funds in particular – December inflows were the best in five years
  • Investor appetite for ESG, global, North American and European funds boosted active equity fund flows
  • But index fund flows comfortably beat active fund flows over the course of the whole year
  • By contrast with other regions, funds focused on UK equities were firmly out of favour with investors – Brexit and the pandemic caused sharp outflows in the second half of the year
  • UK-focused funds did receive a last-minute boost in late December thanks to the Brexit trade deal
  • ESG funds went mainstream in 2020 and accounted for more than half of all the flows into equity funds for the year