Active funds lead retreat as UK providers suffer record outflows

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The UK fund industry suffered “record” net outflows in 2023, a year in which active providers struggled when compared with their passive peers, according to the latest Pridham Report.

The report on UK-domiciled retail fund sales, published this month, revealed that BlackRock was the top-selling provider of such products last year, in terms of both gross and net inflows.

The US fund giant topped the gross sales chart for the 10th consecutive year, as investors ploughed more than £30bn into the firm’s UK funds. Net inflows reached £6.38bn during the year.

Legal & General Investment Management ranked second for gross sales in 2023, after an increase of 26 per cent on the previous year, ahead of Fidelity International and HSBC Asset Management.

Anna Pridham, editor of the report, said that more than 70 per cent of net flows for the top four in the gross sales chart went into passive funds.

“Passive providers came out on top, while active managers struggled against a backdrop of concentrated equity markets and a volatile year in fixed income,” she wrote.

“Investor enthusiasm for sustainable investments waned and [environmental, social and governance] funds recorded their first year of net withdrawals.”

Royal London Asset management, which has in recent years benefited from strong sales of sustainable funds, ranked in 2023 as the leading active fund manager for both gross and net sales thanks to the popularity of its short-dated fixed income and money market funds.

M&G also featured in the top 10 providers for both net and gross sales in 2023, having enjoyed a 90 per cent rise in the latter year on year.

According to Pridham, the gross sales figures “show that established groups like Schroders, Jupiter, BNY Mellon and JPMorgan are attracting significant new flows”.

“However, as mature businesses, they also contend with high levels of natural outflows and switches,” she wrote.

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