Net outflows across the Investment Association fund universe eased in September, down to £505m after August’s £1.8bn.
The fall in outflows was driven by stronger fixed income sales, with bond funds recording their highest net inflows for six months at £818m. Mixed asset funds also continued to attract positive flows, reaching £264m in September.
However, equity fund outflows rose to £2.6bn from the £2bn recorded in August. Europe was the only region to record positive flows with £124m added to funds in the sector.
The slowdown brought total Q3 outflows to £2.7bn, following £307m in July and £1.8bn in August respectively.
Meanwhile, investors moved their cash into money market funds, which recorded inflows of £524m.
See also: IA fund flows: North America sees first outflows for six months in May
Miranda Seath, director, market insight and fund sectors at the Investment Association, said the outflows compared favourably to the same period last year, when outflows reached £3.8bn amid speculation around potential capital gain tax hikes in the Autumn Budget.
“We will look to see how investor sentiment develops in October. With a later Budget this year and rising speculation over pension tax changes, we hope that investors wait to see rather than making irreversible moves to take out tax-free lump sums from pensions.
“Investor behaviour in September suggests patience rather than pessimism as they wait for greater clarity before making their next move. More broadly, our latest poll of UK adults shows that a perception that investing is risky remains the biggest barrier to investing for UK adults, underlining the need to transform how risk is communicated.
“Our work to support a re-framing of risk warnings as part of the Leeds Reforms will help potential investors better understand the risks and rewards of investing. Longer term, supporting an investment culture and consumer confidence will help to boost participation and strengthen long-term financial resilience for households and the economy.’’
