Responsible fund AUM doubles even as flows level

Flows into responsible funds account for nearly 90% of total inflows

Assets under management in responsible funds have almost doubled this year, according to data published by the Investment Association (IA).

The total value of responsible investment funds in October this year was £88.7bn, up from £47bn in October 2020. This is 5.7% of industry funds under management, the IA said.

However, money wasn’t flowing quite as readily this year, with inflows from retails investors at £ 1,474m in October this year, just under last year’s £ 1,523m. But Emma Wall (pictured), head of investment analysis and research at Hargreaves Lansdown, commented: “Responsible funds continue to see significant inflows from retail investors keen to do good and make money at the same time.”

This reflects the wider trends found in the IA’s data, which showed net retail sales of investment funds totalled £1.7bn in October, the lowest total inflow since September 2020. Outflows from UK equities (-£661m) and North America (-£180m) were partly offset by inflows to funds investing in global equities (£586m) and Asia (£201m) but equity net sales overall were down by £700m from September. 

This means flows into responsible funds, at nearly £1.5bn, account for almost 90% of the total £1.7bn inflows into all investment funds.

In the longer term, assets under management in dedicated ESG strategies are set to reach $30trn by the end of this decade, according to a new report from Broadridge Financial Services. It found  global net flows into ESG mutual funds and ETFs have risen dramatically this year to $577bn in the nine months through September 2021 – this has far surpassed the full-year total of $355bn for 2020.