Equity ESG was the asset class that recorded the strongest inflows in the first quarter of 2022, at £8.6 billion, as investors pulled £10.8 billion out of non-ESG equities, new research showed.
Refinitiv Lipper Research’s quarterly analysis of UK ESG fund flows found that alternatives and bond funds attracted positive flows into ESG assets and negative fund flows for non-ESG assets.
Meanwhile, mixed assets reported positive fund flows for both ESG and non-ESG assets, with the latter slightly outperforming at £2.3 billion, compared to £1.5 billion into ESG assets.
Both ethical and conventional money market funds recorded outflows of £2.5 billion and £9.4bn respectively, with negative flows concentrated in the first two months of the period, Refinitiv Lipper said.
It found that despite the strong fund flows, ESG performance is being eroded in the shorter term.
While ESG outperforms over three and five-year periods in the top selling sectors, ESG Equity Global returns trailed 7.8% to 8.3% behind its non-ESG equivalents over the 12-month period.
Likewise, Bond Global Corporates USD ESG funds fell by 8 basis points more than their conventional peers in the same period.
Equity global continues to dominate UK flows, which has been the case for over a year, seeing £7.6 billion in ESG fund flows compared to outflows of £3.5 billion from non-ESG.
These figures were significantly greater than the next classification, Mixed Asset GBP Aggressive, which saw ESG and non-ESG flows of £665 million.
Meanwhile, BlackRock saw the largest positive ESG flows of the asset managers in the first quarter of 2022, predominantly due to its equity offering, which netted £5.1 billion.
It was followed by Royal London, which took £1.1 billion in the same period.
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