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Out of this world

The latest Investment Association data shows September 2022 was the second worst month on record for the open-ended funds market, with only the start of the pandemic period spooking investors more.

In total, outflows were £7.6bn in September alone. How's that for a Halloween trick?

The benefits of diversification were not enough to entice investors into Global funds, which had outflows of £2bn.

This year might have been the year when the great growth versus value debate might have been settled.

Although value began the year in fine fettle, by around May it started to slip back and as year end approaches those who believe in value cannot say it has been a glorious year.

The MSCI World Value index has lost 10 per cent year to date while the MSCI World Growth index has lost 29 per cent.

And the tide may be turning back towards growth, according to our database. 

The most popular global fund in our database, Fundsmith Equity, hasn't had a great year but has attracted three new buyers in 2022 compared with one seller. The direction of travel may be evidenced by the fact two of the buyers made their investment in the third quarter of this year.

Fundsmith has been increasing exposure to technology stocks in recent months, adding a holding in Apple in October, and retaining a stake in Meta, which has fallen sharply in value this month.

Meanwhile the second most popular global funds in our database are Vanguard Global Small-Cap Index and Ninety One Global Environment, both of which attracted buyers in 2022.

Allocations to global equity funds have been rising this year, from 6.8 per cent at the end of May to 7.4 right now.

The house with the largest allocation to global funds is Wise, with a marmalade-dropping 39.8 per cent - though this is in part due to its decision to not allocate to any regions other than the UK.

You Investment Management, Progeny and Brooks Macdonald each have over 10 per cent, and Tacit is also strongly represented with 25 per cent.

A number of other DFMs have zero allocated to global equity funds, including Abrdn. Liontrust and the Evelyn Core portfolios. 

All equity sectors except Global equity income had outflows. 

Proving that sometimes noise is not the same as insight, in September 2022, the best-selling IA sector was UK gilts, which had inflows of £412m, while index-linked gilts attracted £202m of fresh capital.

It was a month in which even the Responsible Investment sector was unable to dodge the autumn gloom, with outflows of £264m.

That’s only the second time this year that the sector has had an outflow.

And despite recession fears rising, corporate bond funds were not viewed as a shelter from the storm, with an outflow of £612m. 

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