Equity funds experienced record-breaking monthly outflows in August, according to fund-flow data from the Investment Association. Almost £3bn of investments were removed from the sector over the course of the month, with £1bn withdrawn from UK equity strategies alone.
The worst-performing IA sector was UK All Companies, which accounted for more than three-quarters of the total fall in UK equity investments.
Across the board, net outflows totalled £2.6bn, said the IA. After the net removal of £2.5bn from funds in June, and £129m in July, August’s figure reflected continuing concern about a potential slowdown in global economic growth.
Responsible investment and tracker funds were also affected, with both recording relatively modest inflows. The latter saw £412m of investments added, their second weakest monthly showing of the year.
While investors were quitting equities in droves, fixed income enjoyed a second successive month of inflows. Just over £1bn more was directed into the asset class during August, following July’s figure of £893m. Of the five best-selling IA sectors in August, three were fixed income; strategic bonds were the most attractive, with mixed and corporate bonds placing third and fifth respectively.
Chief executive of the Investment Association, Chris Cummings, said: “While August is traditionally a quieter month for fund sales, political and economic uncertainty continued to leave savers navigating challenging market dynamics. Bond funds saw inflows, but in most IA sectors, sales have weakened or turned to outflow.
“UK households are heading into a challenging autumn and winter and grappling with a cost-of-living crisis, which may have an impact on their ability to put money aside. With market dynamics in a state of flux, we could see investors react to the surging yield on gilts and UK corporate bonds, or bide their time until we see a period of relative calm.”
So far in 2022, investors have removed £14.6bn from UK funds.
