Money market funds enjoy 'best year on record' with £4.4bn inflows

investmentweek.co.uk:

Last year, a record £4.4bn was paid into money market funds, as high interest rates and low risk proved incredibly attractive to investors.

Last year, a record £4.4bn was paid into money market funds, as high interest rates and low risk proved attractive to investors.

However, as sentiment towards riskier assets rose sharply in December, inflows to money market strategies fell to £294m, well below the average of the previous six months, Calastone noted.

ESG funds suffered the opposite fate, registering the first year of net selling since the ESG boom began in 2019.

Equity funds gather £449m inflows after six months of net selling

In 2023, ESG funds shed nearly £2.4bn, with December marking the eighth consecutive month of outflows, at £54m, after investors started turning against ESG in May 2023.

December also saw the biggest surge to equity funds since April 2023, with nearly £1.2bn of inflows. US equities came out as the clear winners, with net inflows more than doubling in December alone to a record £968m.

European equities, however, managed to turn their fortunes around last month after suffering outflows in every month since January 2022. They added a net £476m in December, their second-best month on record.

Calastone said global and emerging funds also posted inflows in December, while the only outliers were UK-focused equity funds, which shed £418m, even though the figure was below their 2023 outflow average of £667m.

Equity funds suffer largest outflows since Mini Budget as ESG funds shed £700m

However, the FFI highlighted that, overall, equity funds have shed capital for the second year in a row, mostly due to UK equity strategies, as December's capital injection «was not enough to prevent them suffering annual