The latest Calastone Fund Flow Index measurement points to a massive outflow from funds in the UK in the last days of February in response to the Coronavirus threat.
It was a yo-yo month, as during the first three weeks investors bought "enthusiatically".
"But when, on Monday 24 February, the markets began their worst week in over a decade as the virus took hold in one country after another, investors withdrew their capital from equity funds at their fastest rate on Calastone's record: in the last week of February alone they sold an unprecedented net £1.55bn of equity holdings. Calastone's FFI: Equity dropped to 49.1 for the full month, but in the last week was just 37.7, its lowest ever reading (a score of 50 means buys equal sells)," Calastone notes.
Active equity funds shed £1.18bn of capital, while passiv funds experienced net inflows of £832m through the full month. However, passive funds also experienced outflows in the last week of the month.
Institutional investors reacted more strongly than retail investors, Calastoner notes.
They were net sellers of equity through the whole month, while retail investors were described as "modest net buyers".
"This in large part reflects the regular savings plans embedded in retail investor accounts, as evidenced by the relatively muted impact on passive funds, but may also indicate that institutions were quicker off the mark in reacting to the news as it developed," Calastone notes.
The global nature of the Coronavirus threat unsurprisingly meant that global equity funds were hit hard, having their worst monthy on record according to Calastone's data.
The sector saw a net £309m exit, but £881m left in the last five days of the month alone, reversing inflows earlier in the month.
Funds focused on Asia, Europe and regions, including funds focused on China, and sector funds were also "heavily affected". UK funds saw net sales of £107m on the last day of the month, as the FTSE 100 index dropped to its lowest level in half a decade, but overall for the month the sector saw inflows of £227m.
And, while there was net buying of fixed income and mixed-asset fundes, it was not enough to offset the sales of equities. Alternative, commmodity and absolute return funds all also experienced outflows. Property funds recorded their 17th consecutive month of outflows, although, perhaps ironically, the last week of February saw net inflows back to the sectors "as investors perceived property to be a relative safe haven".
February thus became just the fourth month on record at Calastone to see net outflows across the sum of all types of funds. The last time that happened was in October 2016. Overall, UK investors withdraw a net £144m from funds through the month.
Edward Glyn, Calastone's head of Global Markets, said: "Fear ate greed for lunch in the last few days of February, as equity funds saw outflows at their most ferocious in five years. After an initial flurry of outflows in January, funds benefited from extreme complacency over the coronavirus outbreak. But the news that the epidemic had taken hold in Italy and then quickly spread across the world caused a dramatic reassessment of its potential impact on the global economy. Investors have voted with their feet.
"The curiously relaxed approach to funds focused on UK equities reflected the limited number of infections, as well as the extremely low valuations for UK shares. That was enough to keep the sellers at bay for a time, but by the last day of the month there were signs of capitulation even for this sector too.
"It's impossible to predict what will happen next, or whether the market has over- or underreacted to the epidemic. The Calastone Fund Flow Index can keep investors informed of the latest developments as they happen."
The Fund Flow data is based on over a million buy and sell orders handled by Calastone each month since January 2015. More than two thirds of UK fund flows by value pass through the network each month, and all trades are included in the index calculations.