Every UK asset class experienced net outflows in May, the first time this has happened since January 2019 “when assets were offshored prior to Brexit”, according to the latest figures from Morningstar.
The havoc wreaked by inflation, rising rates and a worsening economic outlook saw investors pull £4.3bn from UK funds, the worst performance since £7.5bn was yanked in March 2020 at the onset of the pandemic.
Equities were hit hardest by a considerable margin, haemorrhaging nearly £3.3bn, followed by money market funds (-£417m), while fixed income funds recorded net outflows of £280m having generally seen inflows over the past 12 months.
“As may be expected, outflows have followed the continued short-term poor performance in quality- and growth-oriented funds, such as Fundsmith Equity,” Morningstar said.
Having witnessed an unprecedented £622m walk out the door in May, Terry Smith’s (pictured) eponymous fund was bested only by the iShares Corporate Bond Index Fund (UK), which lost £687m, and the Aviva Investors Corporate Bond Fund, which lost £742m.
The biggest net inflows were recorded by the L&G Future World ESG Developed Index (£582m), the State Street US Treasury (100% Hgd) Bond Index (£523m), and the BlackRock ACS World ESG Insights Equity Fund (£405m).
Baillie Gifford drops from 4th to 8th
By fund group, the biggest haircuts were taken by Aviva (-£2.19bn), BlackRock (-£1.2bn) and Baillie Gifford (-£985m), according to Morningstar estimates.
“Baillie Gifford’s typical growth style has acted as a strong headwind in 2022, and with poor performance of many of its funds, outflows have followed,” it said.
“There were net withdrawals of almost £1bn on top of the £2.7bn seen already this year. These outflows, coupled with a drop in asset size caused by performance, see the group fall to eighth place in terms of UK-domiciled AUM, having been fourth as recently as December 2021.
“Nearly all of its offerings saw redemptions, the only notable exception being Baillie Gifford Responsible Global Equity Income, which saw inflows if £108m,” Morningstar added.
See also: Plummeting share price pushes Baillie Gifford US Growth out of FTSE 250
