As of the end of December, total LSE-listed ETF assets were £987.1bn, with the vast majority coming from equity ETFs (£749.4bn), followed by bond ETFs (£214.8bn) and money market ETFs (£9.5bn).
In 2023 alone, LSE-listed ETFs added £179bn, making it likely the stock exchange will hit the £1trn threshold soon, said Dewi John, head of UK and Ireland research at LSEG Lipper.
Assets were up 22.2% year-on-year in December, largely driven by strong flows to equity ETFs, up 24%. Money market ETFs had a strong year, with assets soaring by nearly 60% over 2023, while alternative ETFs lost 79.4% from December 2022.
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Equity ETFs comprised the top five best-sellers, based on Lipper’s global classification, with US equities taking the top spot, followed by global equities, European equities, eurozone equities and Japanese equities.
Among US equities, the iShares Core S&P 500 UCITS ETF was the biggest asset gatherer in December, adding £955.8m; whereas the Xtrackers MSCI World ESG UCITS ETF 1C was the top fund in the Equity Global sector.
On the other hand, the largest outflows in terms of sectors were suffered by US government bonds, which were down more than £1bn, followed by energy, Korean equities, commodity blended and UK equities.
Sustainable ETFs fared well in December, adding £3.8bn, with sustainable equities taking the larger share of inflows. The top sustainable ETF for the month was Xtrackers MSCI World ESG UCITS ETF 1C, which raked in £685.2m.
LSEG Lipper noted active ETFs managed to turn their fortunes in December with £544m of inflows, after two consecutive months of redemptions. JPM US Research Enhanced Equity ESG UCITS ETF was the top fund for the month, with flows of £198.1m.
From a promoter perspective, BlackRock was by the best-selling provider, with £4.7bn of assets gathered throughout the month, more than doubling DWS’, which came in second place with £2bn.
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Overall, there were 168 ETF launched on the LSE in 2023, down from 2022, with over 200 launches and from 2018’s record of nearly 250 new listings. However, LSEG Lipper noted the figure was still above the average since 2010 of 156.
John said: “Assets were up 22.2% year-on-year in December, driven by strong flows to equity funds. which make up more than three-quarters of the ETF assets on the exchange. Indeed, all asset classes have seen year-on-year increases.
“Money market funds have increased their share most over the year (up 59.1%), albeit from a low base. On the other hand, alternative ETFs are down to 79.4% of their December 2022 asset value – although, again, this is from a low base.
“Equity funds are the largest asset type listed on the LSE (75.9%, slightly up on last month), followed by bonds (21.18%). No other asset class constitutes more than 1%.”
