The IA: Government bond and money market funds reign supreme among investors

Sectors saw combined inflows of £1bn in May

Chris Cummings chief executive IA
Chris Cummings


UK retail investors remained cautious during May this year, according to the Investment Association’s latest data released today (6 July), with the IA Government Bond and Short Term Money Market funds seeing the biggest monthly inflows of £658m and £382m respectively.

Overall inflows into funds were modest at £356m, with UK Gilts, volatility managed and global equity income funds also proving popular with respective upticks of £344m, £173m and £173m throughout the month.

In contrast, UK equity funds suffered the biggest outflows at £1.2bn overall, with the IA UK All Companies proving the worst selling sector as investors removed £916m of their capital.

European, Japanese and North American equity funds also experienced outflows in May, at £336m, £134m and £65m respectively.

The only equity sectors to have weathered the storm were Asia funds, which saw net retail inflows of £97m, and global funds, which took £261m of investors’ capital. Overall, equity funds saw outflows of £992m in May.

Asset class

In terms of asset class, fixed income vehicles proved most popular with inflows of £632m. Money market funds took silver spot at £500m, while bronze place went to mixed asset funds at £159m. Funds in Others saw a modest uptick in investor interest at £116m, while investors withdrew £60m from property funds.

Chris Cummings (pictured), chief executive of the IA, said: Caution was the theme of the month, with Government Bonds seeing strong inflows.  This is not surprising given concern about potential global recession and ongoing conflict in Ukraine. 

“Investors continued to diversify their equity portfolios, with continued inflows into global equity funds.  However, North America had its first outflow in seven months, possibly reflecting uncertainty ahead of resolution on the debt ceiling.  The UK remains unloved amidst persistent outflows.” 

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