15th February 2022
15 February 2022
ESG fund flows fall on HL platform in January against backdrop of market turbulence
- ESG fund flows fell on the HL platform in January as investors looked to take gains and buy in to other sectors against a backdrop of market turbulence
- Net flows into ESG funds were down 115% in January 2022 vs January 2021
- January 2022 was the first month of negative net flows into ESG funds since March 2020
Emma Wall, Head of Investment Analysis & Research, Hargreaves Lansdown:
“January saw significant market volatility as fears of a Fed rate rise cooled the appeal of growth stocks. The Nasdaq index of US tech stocks recorded its worst month since the pandemic slump in March 2020, as investors took gains and instead sought out stocks such as financials, which tend to benefit from higher interest rates. ESG funds were caught up in the style rotation as the appeal of growth-orientated names waned.
However, before sounding the death knell for responsible investing it is important to consider the context. January 2021 was a record breaking month for flows into responsible funds on the HL platform – so January 2022 always had a high bar to beat. Last month was also a choppy month for fund flows across all sectors, as investors sought to make sense of the higher-rate outlook. The increased popularity of responsible investment funds will be a structural shift, rather than a faddy trend, and while there may be months where flows slow, assets under management are likely to grow steadily over time. The Investment Association fund flows data for 2021 supports this, with retail investors allocating more to responsible funds through the year.”
|
Net flows into ESG funds |
|
|
Year |
YoY % Change |
|
Jan-16 |
Base Year |
|
Jan-17 |
-27% |
|
Jan-18 |
753% |
|
Jan-19 |
-58% |
|
Jan-20 |
3082% |
|
Jan-21 |
115% |
|
Jan-22 |
-115% |
|
Top ESG funds by net buy (£) (Jan, alphabetical) |
|
Aegon Ethical Equity Fund |
|
BNY Mellon Sustainable Real Return |
|
Fundsmith Sustainable Equity |
|
Janus Henderson UK Responsible Income |
|
Legal & General Future World ESG Developed Index |
|
Pictet Global Environmental Opportunities |
|
Stewart Inv Indian Subcontinent Sustainability |
|
Troy Trojan Ethical |
|
Troy Trojan Ethical Income |
|
Vanguard SRI European Stock |
|
Top IA sectors by net buy (£) (Jan, alphabetical) |
|
Europe Including UK |
|
Flexible Investment |
|
GBP High Yield |
|
Global Equity Income |
|
Mixed Investment 20-60% Shares |
|
Offshore |
|
Property |
|
Targeted Absolute Return |
|
UK All Companies |
|
UK Equity Income |