Responsible funds in the UK see record $9bn inflows amid Covid crisis

UK net inflows are nearly quadruple the £1.9bn ($2.49bn) scooped up over the first three quarters in 2019.

Responsible investment funds remain on track for a record shattering year as investors continue flocking to the asset class with no signs of the Covid crisis letting up, as reported by ESG Clarity in the UK and sister publication Portfolio Adviser.

A record £7.1bn ($9.32bn) has flown into responsible funds so far this year, according to statistics from the Investment Association, nearly quadruple the £1.9bn funds took in during the first three quarters in 2019. 

In September alone, responsible funds raked in £975m, building on the £897m attracted during August. 

“In a year clouded by uncertainty, responsible investment funds are a beacon for how savers can put their money to work to support positive change globally, and our industry can be proud that these funds are reaching new heights of popularity,” said IA chief executive Chris Cummings

Overall, UK savers ploughed £5.4bn into retail funds in Q3, more than three times the net retail sales for Q3 2019 of £1.2bn. In September, net retail sales hit £1.6bn, down slightly from £1.8bn in August.  

Adrian Lowcock, head of personal investing at investment platform Willis Owen, commented on the IA figures: “ESG and socially responsible investment funds have been the overwhelming winner since the pandemic, and this has continued in the third quarter of the year.

“Whether the 270% jump in flows year-on-year into ESG funds is itself sustainable is not yet clear, but there is no denying that, given the scale of investment throughout the year, this feels like a longer-term shift in mindset rather than a kneejerk trade.”

Last month, Morningstar reported flows into global sustainable funds continued at an accelerated pace in the third quarter, while the number of new products launched hit an all-time high of 166 for the three-month period to the end of September.

Stats in Morningstar’s Global Sustainable Fund Flows: Q3 2020 in Review show $80.56bn flowed into global sustainable funds, an increase of 14% on the previous quarter, and assets under management (AUM) climbed 19% to a fresh high of $1.23bn, having topped the $1trn mark in Q2.

European funds took the bulk of sustainable flows with 76.6% of the overall global inflows, albeit this was a slightly lower proportion than in Q2 when 86% was recorded. However, the region itself topped $1trn in sustainable AUM in the third quarter. US sustainable funds also took a lower proportion of the overall flows, at 12% compared to 14.6% in Q2, as investors’ interest from the rest of the world rebounded.

Hortense Bioy, director of sustainability research, EMEA and APAC at Morningstar and ESG Clarity editorial panellist, commented: “The European sustainable fund space reached a milestone last quarter with $1trn of assets under management, an impressive feat when viewed against the backdrop of the Covid-19 crisis. The steady Q3 inflows were driven by continued investor interest in ESG issues, intensified in the wake of the pandemic.”

To read more on the wider retail fund flow stats, go to ESG Clarity‘s sister title Portfolio Adviser