• Inflows to funds were a third of the previous month’s levels
• Absolute Return funds offloaded with £604m withdrawn
Laura Suter, personal finance analyst at investment platform AJ Bell, comments on the latest Investment Association figures for February:
“This is the first peek at what investors across the UK have been doing with their portfolios since the market crisis began, with the end of February seeing the start of the wild market swings we’ve been seeing since. While investors still put money into markets in February, it was only a third of the inflows seen in January, and market falls mean that total assets in the industry fell.
“Investors sold out of equity markets, with outflows of £210m in the month. The UK was the most unpopular area as investors yanked £614m from UK All Companies funds – marking the biggest monthly redemption from the sector in almost two years. Europe was also out of favour, with outflows of £105m, as investors instead diversifying into global funds, which saw the largest influx of money at £206m.
“Absolute Return funds are exactly the type of funds you’d want to have access to in an impending market fall, as they aim to reduce losses in market downturns. However, investors have clearly lost confidence in much of the sector, as it saw a whopping £604m withdrawn in February alone. This means the funds have now notched up £5bn of outflows during the past year and £8.6bn of outflows in the 20 months the sector has seen consistent withdrawals.
“Property funds actually saw modest inflows in the month, despite most having to suspend in March due to outflows and uncertainty over pricing, showing how quickly investor sentiment can turn on a sector. This data only captures the very start of the market falls that we’re still experiencing and we’d expect March’s figures will show outflows across many sectors, despite the presence of some bargain buying by some investors.”
