BlackRock and Vanguard saw the biggest inflows into their funds in Q2 out of UK asset managers, according to new research, as the sector as a whole saw improving fortunes.
According to the ISS MI Pridham Report, the two American asset managers saw positive net sales of £2.7 billion and £1.6 billion respectively. This was the first time Vanguard had reached the top ten.
They were losely followed by HSBC Asset Management with £1.5 billion. Rounding out the top ten were LGIM, Fidelity, JP Morgan AM, Man Group, Hargreaves Lansdown, Rathbones and Royal London Asset Management.
The report also suggested that fund groups operating in the UK had seen an improvement in their fortunes, with 43% seeing positive retail net flows in the quarter, the highest since Q3 2021.
In Q1, only 38% reported positive net sales, with the figure hitting a low of 21% in Q4 2023.
Benjamin Reed-Hurwitz, EMEA Research leader at ISS MI and lead author of the Pridham Report, says: “There is a sense of guarded optimism among fund groups at the end of the second quarter. Inflows were steady and there has been a slowdown in outflows among the U.K.’s largest fund groups, suggesting that investor confidence is improving.
“Whether that trend continues in Q3 remains to be seen, especially considering the severe market volatility we have witnessed in recent weeks.”
While recent volatility could create a challenge, Reed-Hurwitz also suggested that falling interest rates might push more investors towards equities.
Reed-Hurwitz added: “While the success of passive funds has put a recent dent in many active managers fortunes, there is a sense that investment opportunities will continue to broaden in the coming quarters, particularly in equity, which will provide an opportunity for many active styles to thrive.
“Changes in demand for active and passive solutions, however, are not only a function of evolving market conditions. It is also a function of today’s cost-conscious environment and the rise of investment gatekeepers in the retail arena. The move to centralised investment propositions and consolidation amongst advice firms has led to investment gatekeepers influencing more and more of where the money is being invested. Consequently, their portfolio construction preferences have become more visible in the fund landscape.
“Adapting to this environment is leading to more partnerships being formed at the entity level between fund managers, gatekeepers and/or distributors, and a refining of market segmentations to better identify the true decision-maker behind today’s investment decisions.”
