Retail investors withdrew more than £850 million (€990m) from UK regulated fund products in January amid concerns over global trade tensions, eurozone instability and the likelihood of a no-deal Brexit.
Equity managers were hit particularly hard, with UK retail investors taking £450 million out of European equity funds and £135 million from UK equity funds, according to the latest figures released by the Investment Association, the UK asset management trade body.
Investors turned to mixed asset funds to diversify their risk, with £367 million in net retail sales flowing into this asset class during January. Fixed income funds, which attracted £253 million in net retail subscriptions, were the only other fund category to see net inflows. Money market funds (-£74 million) and property (-£108 million) both experienced net withdrawals.
Looking regionally, Japan funds attracted the highest level of retail interest, with net inflows of £146 million during January, closely followed by North America funds (£134 million). All other regions experienced net redemptions.
Investors continued to sell out of equity funds in February, with UK investors pulling £215 million out of their equity fund holdings according to data from Calastone, the London-based funds transaction network.
This level of redemptions was the highest seen since the build-up to the US presidential election in 2016, according to the monthly Calastone survey which monitors net investment flows from UK-based independent financial advisors (IFAs), fund platforms and institutional investors into UK-domiciled asset managers.
In the face of weak global economic data, investors sought to ‘de-risk’ by increasing their exposure to bond markets. Fixed income funds registered £426million in net subscriptions during February, their highest level of net inwards investment since September.
In contrast, investors took a cautious view on real assets. Property funds experienced their fifth consecutive month of net withdrawals. European equity funds were hit with £292 million in net redemptions during February, having only received net monthly inflows once in the past 10 months.
However, UK equities defied this pessimism with investors pouring £160 million of net investment into the sector, believing that current pricing levels offer an attractive buying opportunity.
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