UK investors withdrew £2.5 billion from equity funds in April, following redemptions of £5 billion in the first quarter.

According to Morningstar, which compiled the data, these outflows were despite the UK equity market being one of the strongest worldwide in this year.

However, £656 million (excluding money market) was added to UK-domiciled funds in April, with fixed-income funds in more favour than equity strategies. In total, fixed income funds attracted £2.1 billion of net flows during the month.

Equity fund outflows were driven by passive and UK offerings, but sustainable funds were still in favour, with inflows of £1.3 billion.

Gilt funds were the most favoured fixed income funds by investors, with global large-cap equity blend strategies also in favour – attracting net inflows of £482 million and £1 billion respectively.

Conversely, the hardest-hit sector was US large-cap funds with £1.1 billion of outflows, as performance in 2022 so far has declined.

BlackRock experienced its third-consecutive month of redemptions, but Vanguard recovered from outflows in February with its highest net inflows in a year in April (£719 million).

In terms of growth rate, Fidelity has recorded the strongest with 1.59%. Meanwhile, the growth rate has contracted the most for Aviva, by –1.36%.

While many fossil fuel stocks performed strongly and sustainable funds largely underperformed, ESG-minded investors were not discouraged, and £1.8 billion (excluding money market) was invested in these funds across the asset classes.

Allocation or multi-asset strategies experienced further inflows, following a recent trend.

In April, one of the most popular Morningstar sectors was the GBP Allocation 60-80% Equity sector with net inflows of £370 million throughout the month.

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