January 2021 sees jump in responsible investing to £1.2bn in the UK

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The latest set of Investment Association (IA) data released earlier today has shown where investors in the UK were putting their money in the first month of 2021.

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Following a resurgent end to 2020, responsible investment funds attracted a record £1.2bn in funding from entrepreneurs and investors.

In total, this was 37% of January’s total £3.2bn inflow into retail sales.

Further findings from the data also revealed that of the £1.2bn invested into responsible investment funds in January, £703m of it was invested through equity funds. Also, more than £180m was invested in bond funds and £241m was invested in mixed asset funds.

Over the last 12 months, responsible investment equity funds make up the highest proportion of flows, with average monthly sales of £510m across the time period.

Furthermore, responsible investment funds under management now totals over £56bn, growing 66% over the past 12 months, in comparison to 7% across funds overall.

Almost 60% of the £56bn is invested in equity funds, with 20% in bond funds and 20% in mixed asset funds.

Kate Marshall, Acting Head of Investment Analysis at Hargreaves Lansdown, commented: “Responsible investment funds were the shining light of 2020. Against the backdrop of a global pandemic and uncertainty about our futures, investors honed in on their moral values and ethical credentials. Environmental, social and governance (ESG) concerns have become more important in many ways, including the way investors think about what to do with their hard-earned savings.

“Heading into the new year and investors were in a cautiously optimistic mood. Bonds were the best-selling asset class in January, as investors sought a place for their cash, but perhaps with less of the volatility faced by equities in 2020. Tracker funds also drew attention, showing that many investors still favour a passive approach, despite many active managers faring well last year.

“Global funds were also one of the hottest places to be, and that trend continued into 2021. While we’ve started to see some traction in the UK, some investors preferred the comfort of global businesses that performed well in 2020. That won’t always be the case though, with the UK market performing well more recently. As always, diversification remains an investor’s best friend.”

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