Net fund outflows of £205m for the month of March are being described as “the weakest tax year end outcome in memory” as the typical scramble for retail investors to meet personal tax allowances fails to materialise for the UK funds industry.
Equity funds shed £630m over the month with Global and Japan funds the only sectors to attract inflows, according to Investment Association figures. Fixed income was the best-selling asset class taking in £810m.
Europe ex-UK was the worst-selling sector losing £412m over the period.
The Absolute Return sector lost £400m over the month clocking up its ninth consecutive month of outflows, said AJ Bell personal finance analyst Laura Suter. “These outflows are likely to be focused on the few giants in the sector, who have failed to impress investors, and with £4.2bn withdrawn from the sector in those nine months investors are voting with their feet.”
Best-selling fund sectors for March 2019
| Sector | Net inflows |
| Global | £691m |
| £ Strategic Bond | £526m |
| Global Bonds | £236m |
| Mixed Investment 40-85% Shares | £231m |
| UK Gilts | £108m |
Source: Investment Association
Funds industry misses tax-year end boost
The figures contrast with the same period in 2018 when the UK funds industry enjoyed £1.6bn of net inflows. Total assets under management remain at £1.2trn, unchanged from the same period last year.
March is normally the peak period for investment fund purchases as private investors scramble to beat the end of tax year deadline, said Tilney managing director Jason Hollands. He described the IA’s sales figures as “the weakest tax year end outcome in memory”.
Hollands said: “This pattern came despite equity markets posting the best start to a year in two decades, as shares bounced back aggressively from their slide in at the end of 2018, buoyed by the US Federal Reserve signalling it would pause on further rate hikes, gathering optimism that the Chinese economy is stabilising and signs that the US and China might soon resolve their trade war.”
IA chief executive Chris Cumming (pictured) said performance helped buoy AUM despite the “bumpy start to the year”.
“Ongoing economic and Brexit uncertainty continued to impact Europe and UK equity funds, with savers pulling out £1.4bn and £816m, respectively, since the start of the year.
