Retail investors pull half as much cash in October after record September

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06 December 2022

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UK retail investors withdrew £3.7bn from funds in October, according to the Investment Association (IA). It was the ninth month this year to record net outflows, with April the only outlier, but almost half as much cash was withdrawn compared with September’s record £7.6bn.

Sterling corporate bonds was the best selling IA sector for the month as a net £879m poured in. This was closely followed by the short term money market, which attracted £875m in net retail sales.

Tracker funds enjoyed a solid month with £1.4bn in inflows, after £264m was lost in September.

However, it was a poor October for multi-asset funds, with the sector posting its highest outflows of the year at £808m. It was the only main asset class that saw outflows increase compared to September.

Investors continued to pull cash from equity funds as a total £2.3bn flowed out in the month, though this was a considerable improvement on September when equity funds experienced a record £5bn in outflows.

Chris Cummings (pictured), chief executive of the Investment Association, said: “Outflows slowed in October as markets settled following the gilt crisis in September, and investors took a wait-and-see approach ahead of the Autumn Statement, which saw an overwhelmingly calm reaction from markets.

“There are pockets of promising news, with investors once again favouring tracker funds, with inflows the second highest so far this year. Responsible investment funds, which have seen consistent inflows throughout the year, also moved back to inflows following last month’s outflow.

“Looking ahead to next year, we will hopefully see more stability in markets and inflation come under control following the interventions from central banks. However, with an anticipated economic recession in the UK that could last until 2024, the outlook remains challenging for investors.

“As conditions shift, a higher interest rate environment means investing in bonds will become more attractive than it has been over the last decade. Investors will need to navigate the changing investment landscape, and we may see further shifts in the pattern of fund flows.”