Brexit blamed as UK fund inflows plummet 85%

UK All Companies the worst selling Investment Association sector in 2018

LGIM gets green light for Brexit plans

The UK funds industry took in just £7.2bn of retail money in 2018, shrinking 85% from £48.5bn net sales in 2017, Investment Association data reveals.

Investment Association chief executive Chris Cummings blamed political and economic uncertainty for the sharp drop in investor confidence, particularly with UK equities, which suffered net outflows of £4.9bn.

Cummings said: “As the clock ticks towards the UK leaving the EU, asset managers and the millions of savers who rely on them are looking for greater certainty. It is critical that every effort is now made to find a constructive path forward that protects Europe’s savers and investors from the cliff edge effects that a no-deal Brexit could bring.”

In the 31 months since the referendum, UK equity funds experienced outflows of £11.5bn, more than offsetting the £5.6bn inflows in the 31 months preceding the referendum. IA UK All Companies shed more money than any other sector suffering £3.9bn outflows.

Beyond Brexit

US-China trade tensions, the dramatic slide in the Turkish lira, and the Italian budget crisis also rattled investors. Global, Asia and North America equity funds remained popular with investors throughout the year, until December when all experienced outflows.

The IA Global sector was the most popular in 2018 taking in £3.9bn, more than half of total net flows across the industry.

Meanwhile, monetary policy triggered a bonds sell-off due to the European Central Bank accounting the end of its asset purchase programme in December, while the US Federal Reserve signalled its intention for further rate rises following August’s increase.

Best-selling IA sectors of 2018

SectorNet retail sales
Mixed Investment 40-85% Shares£3.3bn
Volatility Managed£1.7bn
Mixed Investment 20-60% Shares£1.5bn
Asia Pacific ex-Japan£1.3bn
Source: IA

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