InvestmentsOct 7 2022

UK investors flee equity funds in record-breaking dash

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UK investors flee equity funds in record-breaking dash
Pexels/Suzy Hazelwood

UK equity funds saw the highest level of outflows on record in August, according to data from the Investment Association.

Some £2.9bn was redeemed from equity funds in the month, in comparison to £1.3bn invested in the products in August 2021.

UK equities were particularly bruised, with investors pulling out £1bn, with £828mn flowing out of global equities.

This is almost double the £458mn withdrawn from UK equity funds in July.

UK households are heading into a challenging autumn and winterChris Cummings, IA

Consumer and investor confidence slumped in August as concerns over the cost of living crisis and an economic slowdown grew, with GfK's monthly consumer index showing the lowest levels of confidence since the survey began in 1974.

Inflation hit 10.1 per cent in the UK, rising by the steepest gradient in 40 years as the cost of food, non-alcoholic drinks and transport rose.

                                 

Funds Under Management  

Net Retail Sales  

Net Institutional Sales  

August 2022   

£1.4tn

-£2.6bn

-£39mn

August 2021 

£1.6tn

£5.3bn

£249mn

Source: IA

Investors flocked to safer assets in August amid market volatility, with bond funds seeing net inflows of £1bn.

Strategic bond funds were the most popular sector overall, with £288mn invested, with mixed bonds seeing £205mn and corporate bonds rising by £172mn.

Infrastructure was another popular sector, with £205mn invested overall in the month, and volatility managed funds seeing £194mn invested.

Chief executive of the IA, Chris Cummings, said while August is traditionally a quieter month for fund sales, political and economic uncertainty continued to leave savers navigating challenging market dynamics. 

“UK households are heading into a challenging autumn and winter and grappling with a cost-of-living crisis, which may have an impact on their ability to put money aside. 

“With market dynamics in a state of flux, we could see investors react to the surging yield on gilts and UK corporate bonds, or bide their time until we see a period of relative calm.”

A quarter of funds, totalling £5.9bn, were sold through IFAs in August, a slight drop from the 29 per cent seen in July.

sally.hickey@ft.com