Refinitiv | Everything Flows: Brexit Fears Spark Dash to Cash

by Dewi John.

Spooked by concerns over a no-deal Brexit, investors banked profits, as Money Market funds saw the largest flows in December

Asset Class View

• With the threat of a no-deal Brexit looming, investors put more than £8bn into Money Market funds in December. Mixed-Assets funds were the second-most popular allocation, although lagging considerably with £2.21bn. Equities’ take was down over the month—no surprise in this environment.

Active v Passive

• While Money Market and Mixed-Assets funds are overwhelmingly the terrain of active managers, the rotation from active into passive in equities and bonds continues—albeit at a more muted level, with both asset classes seeing positive passive and negative active flows.
• ETFs dug their heels in, as their share of passive market flows rose to an average 50%, despite equity and bond passive flows being down on November.

Classifications

• Money Market GBP was the most popular Lipper Global Classification, taking in £8.1bn—almost double the previous month. Equity Global, with distinct active and ESG allocations, followed with £2.97bn. Small- and mid-cap UK equities bucked the trend against UK assets, attracting £1bn into passive vehicles
• December was the month of the Anglophobe trade, as Equity UK shed £3.95bn, followed by Bond GBP Short Term, Equity UK Income, and Real Estate UK.

ESG Flows

• Equity flows dominated the month’s ESG sales. But the real story is that ESG dominated equity flows overall (£2.66bn), with non-ESG equities otherwise in negative territory.

Asset Manager View

• BlackRock led the month’s flows (£3.51bn), netting £1.9bn in Money Market assets alone. The firm also gained £1.43bn in equities. Aviva, too, was a major beneficiary of December’s dash to cash, taking £3.57bn in Money Market funds.