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Poor equity fund demand boosted by a single passive product

uk_investment_fundsThe popularity of a BlackRock passive Japanese equity fund distorted fund flow data in September, making demand for equity funds appear stronger than it was.

Active equity funds in the UK suffered almost £2 billion (€2.2 billion) of redemptions during the month, but a large “one-time subscription” of £1.8 billion to the BlackRock ACS Japan Equity Tracker bumped up the fund flow figure for equities as a whole.

Bhavik Parekh, associate analyst, manager research at Morningstar, which produced the data, said: “An otherwise poor month for equity funds was hidden by a large net inflow of £1.8 billion into a single fund. Without this, the asset class would be in negative territory, fuelled by net outflows from UK and European equity funds.”

Along with fixed income flows of £1.1 billion and positive flows for asset allocation funds, the BlackRock injection brought the total amount of UK fund flows in September to a net £2.3 billion.

The data also shows that September saw high net redemptions for alternative funds as well, with investors pulling out over £1 billion.

Out of the individual fund groups Invesco suffered the largest outflows – but the total outflow for the group in the third quarter was lower by at least half than the previous five quarters, and the lowest since first-quarter 2018, Morningstar said. 

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