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ESG fund flows fall on HL platform in January against backdrop of market turbulence

  • ESG fund flows fell on the HL platform in January as investors looked to take gains and buy in to other sectors against a backdrop of market turbulence
  • Net flows into ESG funds were down 115% in January 2022 vs January 2021
  • January 2022 was the first month of negative net flows into ESG funds since March 2020

Emma Wall, Head of Investment Analysis & Research, Hargreaves Lansdown:

“January saw significant market volatility as fears of a Fed rate rise cooled the appeal of growth stocks. The Nasdaq index of US tech stocks recorded its worst month since the pandemic slump in March 2020, as investors took gains and instead sought out stocks such as financials, which tend to benefit from higher interest rates. ESG funds were caught up in the style rotation as the appeal of growth-orientated names waned.

However, before sounding the death knell for responsible investing it is important to consider the context. January 2021 was a record breaking month for flows into responsible funds on the HL platform – so January 2022 always had a high bar to beat. Last month was also a choppy month for fund flows across all sectors, as investors sought to make sense of the higher-rate outlook. The increased popularity of responsible investment funds will be a structural shift, rather than a faddy trend, and while there may be months where flows slow, assets under management are likely to grow steadily over time. The Investment Association fund flows data for 2021 supports this, with retail investors allocating more to responsible funds through the year.”

Net flows into ESG funds
Year YoY % Change
Jan-16 Base Year
Jan-17 -27%
Jan-18 753%
Jan-19 -58%
Jan-20 3082%
Jan-21 115%
Jan-22 -115%

 

Top ESG funds by net buy (£) (Jan, alphabetical)
Aegon Ethical Equity Fund
BNY Mellon Sustainable Real Return
Fundsmith Sustainable Equity
Janus Henderson UK Responsible Income
Legal & General Future World ESG Developed Index
Pictet Global Environmental Opportunities
Stewart Inv Indian Subcontinent Sustainability
Troy Trojan Ethical
Troy Trojan Ethical Income
Vanguard SRI European Stock

 

Top IA sectors by net buy (£) (Jan, alphabetical)
Europe Including UK
Flexible Investment
GBP High Yield
Global Equity Income
Mixed Investment 20-60% Shares
Offshore
Property
Targeted Absolute Return
UK All Companies
UK Equity Income

 

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