Investors pull £38bn from UK funds

Investors pull £38bn from UK funds

UK funds have shed 18 per cent of their assets in the past year, as investments continue to suffer in the run up to the referendum, according to Thomson Reuters Lipper.

Figures from the research house revealed investors had pulled £38bn in assets from funds in all the Investment Association categories throughout the year to 31 May.

January proved the worst month overall, with nearly £16bn of net outflows in that month alone.

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The IA Sterling Strategic Bond sector was worst hit as a proportion of its overall size, suffering £12bn of net outflows to the end of May, without a single monthly net inflow for the year.

UK All Companies, which is the largest IA sector comprising 12 per cent of its total assets, suffered a yearly net outflow of £9.2bn. Over the past year, the sector only saw inflows during July.

Just four of the IA sectors experienced more than £1bn of net inflows: property, global equity income, global bonds, and targeted absolute return.

Despite the average fund in the target absolute return sector losing 0.6 per cent over the same period, the sector has been the standout success story for the UK market, collecting inflows totalling nearly £10bn.

The most resilient category in the diversified groups was the IA Mixed Asset 0 to 35 per cent group, losing £410m in assets. By contrast, the IA Mixed Asset 20 to 60 per cent sector has suffered nearly £5bn of net outflows over the past 12 months.

Gary Nettleingham, managing director of Catalpa Financial Planning, said: “The fragile state of the global economy, concerns about valuations and worries around the Brexit vote are driving investors to seek ‘safe harbour’ assets and withdraw money from funds.

“A vote to remain would most likely see markets rebound somewhat; however it is unlikely to alleviate the greater concerns about the fundamental lack of global growth.”