Fixed income strategies drove net inflows for April, data shows

UK-domiciled funds attracted £861 million in net inflows—the first positive outcome since May 2023, according to Morningstar’s data.

This rebound was primarily driven by investments in fixed-income strategies, reflecting a growing investor preference for more stable returns amid economic uncertainty. In contrast, other asset classes experienced only modest flows, underscoring the dominance of fixed-income investments during the month.

The report also highlighted trends in investment preferences. Passive strategies saw net inflows, while active strategies continued to face redemptions. Sustainably labelled strategies lagged behind their mainstream counterparts, breaking a recent trend of higher inflows.

Market preferences leaned towards global large-cap equity and Japan equity, while UK equity categories extended their negative streak with further redemptions. BlackRock emerged as a major beneficiary, leading in inflows for April and maintaining its top position for the year. Meanwhile, Fidelity Index World continued its impressive growth, with year-to-date net inflows exceeding £1 billion.

Conversely, Federated Hermes Short-Term Sterling Prime and Jupiter UK Special Situations faced significant outflows, reflecting a challenging environment for certain funds.

Giovanni Cafaro, analyst, Morningstar manager, research and author of the report, commented: “UK-domiciled funds experienced a modest turnaround in April, reversing the outflow trend observed since May 2023, with fixed-income funds driving inflows. Notably, global corporate bond funds continued to gain traction within the asset class, offsetting outflows from global flexible bond strategies. Within the equity fund universe, investors showed a preference for both global and Japan large-cap equity funds, while UK equity funds continued to see persistent outflows on aggregate.”

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