UK retail investors withdrew a huge £3.5bn from funds during June as concerns over the EU referendum confirmed 2016 as one of the toughest environments on record for asset managers.
Retail investors withdrew some £2.8bn from equity funds during a month which was dominated by the vote on June 23, according to the Investment Association (IA).
The Property sector, mass withdrawals from which saw a number of funds suspend trading at the start of July, saw £1.4bn of net outflows.
The headline net outflow is the worst figure recorded under the IA’s new sales calculation system, which extends back to 2012. It is also significantly worse than the £490m in redemptions recorded in October 2008 under the old sales formula.
It means net outflows for the first half of 2016 stand at £2.9bn, a figure which implies this year is likely to buck a long-running trend. Even the worst year of the past decade, 2008, still saw £4.8bn of net sales.
Only 11 IA sectors saw positive flows in June, with the most popular being Global Bond funds bringing in £250m and Targeted Absolute Return strategies taking £220m.
Overall, fixed income vehicles remained relatively popular with Sterling Corporate Bond, UK Gilts and Sterling Strategic Bond funds seeing an additional £212m of combined net sales. The Sterling High Yield sector, however, saw £142m of net outflows.
The only equity sector to see positive flows was Japanese Smaller Companies, with a minute £17m.
Despite the spectre of the referendum looming large, the single worst-performing equity sector was not UK-based. Europe ex-UK funds were also hit hard by investor sentiment, seeing £754m of net outflows.
The £2.8bn of net outflows from equity funds in June takes the total to £4.9bn in the first six months of 2016.
Bearish sentiment on equity strategies filtered into the multi-asset sectors, with the IA Mixed Asset grouping seeing net outflows of £191m in June, adding to May’s £75m.
Despite the significant flows, investment performance meant assets under management held by UK retail investors rose slightly year-on-year, to £947bn.
IA interim chief executive Guy Sears said: “The retail outflow in June represented just 0.37 per cent of total assets during a period of intense market volatility. Clearly, Brexit has been unsettling, with property and equity funds particularly affected following earlier outflows during 2016.”
