Of those, just over £2bn of inflows were added in the third quarter. Over the same time period, equity funds also experienced £16.4bn of ‘conventional’ outflows.
LSEG Lipper found flows in the other asset classes over the three quarters were “muted”, with bonds taking in £1.1bn in sustainable inflows, while conventional peers netted ten times more at £11.2bn.
Sustainable money market funds gathered around £800m over the nine months, while conventional peers shed £54.5bn, likely a result of pension funds redeploying cash towards safer holdings, Lipper said.
Similarly, both sustainable real estate and alternatives were in the green over the period, with £159m and £72m of inflows, respectively, despite negative flows for their conventional counterparts.
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Between January and September 2023, the only asset class that suffered outflows was mixed assets, losing £75m in the year to date, and £276m over the third quarter.
The best-selling sectors over the period were Equity Global (£5.3bn), Equity US (£4.1bn) and Equity Emerging Markets Global (£1.3bn), with all three attracting more flows than their conventional counterparts, whereas the conventional Equity US lost £5.7bn over the three quarters.
Dewi John, head of research, UK & Ireland, for LSEG Lipper, said: “The outflows from conventional US funds are a continuation of that seen in previous quarters, while the classification saw the highest inflows for Q3, at £1.4bn — which seems a little odd, given that the US equity fund market has not been a traditional home of ESG.
“That is changing. A quick scan through the top ESG money takers shows BlackRock to be cleaning up here, with funds with a significant tilt to large cap tech.”
Sterling, euro and dollar money market funds all made it to the top ten for sustainable flows, whereas their conventional peers were in the red for the period.
John also noted that despite “negative fortunes” for mixed assets, the GBP Aggressive took £426m over the period, with the main beneficiary being Cazenove posting significant inflows for a number of its funds.
Nevertheless, the category’s flows were still a “fraction” when compared to the £1.3bn gathered by conventional mixed-asset funds over the nine months.
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A finding of note, according to John, was how unloved sustainable equity ETFs have been over the three quarters, despite still posting inflows with a meagre £26m. He said there was an almost 50/50 split between sustainable mutual flows and their passive peers at £4.8bn and £4.7bn, respectively.
For sustainable bonds, which raked in £1.1bn inflows over the period, more than half went to active mutual funds (£677m), followed by passives (£310m) and ETFs (£175m).
John added: “There are two conundrums in these figures: first, why sustainable active bond funds seem to be doing so well relative to their conventional peers, which have suffered significant outflows in favour of passives for some time.
“And second, why sustainable bond ETFs are so much more popular than their equity equivalents, despite equities in general being a far bigger market.”
