UK data show record £10bn fund exodus in March: IA

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UK data show record £10bn fund exodus in March: IA

The UK's Investment Association (IA) published statistics today revealing the country's covid-19 induced lockdown resulted in a record £10bn in outflows from retail funds in March.

According to the IA, total funds under management stood at £1.1trn in March, down from £1.2trn in 2019. Fixed income funds were the worst-selling asset class for the month, with net outflows of £7.4bn. 

ESG-linked and alternative funds proved "resilient", the IA reported, with £113m in net retail sales.

The extraordinary scale of central bank interventions in the second half of March saw market sentiment rebound, and is likely to help investors' confidence in April."

Chris Cummings, CEO of the IA, said: "With the fastest switch to a bear market in history, the introduction of global lockdown measures designed to fight coronavirus held significant sway over the fund market in March, with a record £10bn of retail savings flowing out of funds.

"Investors generally avoided taking money out of equity funds at low valuations. Instead, the focus was on bond funds as portfolios were re-balanced and some sought safety in cash.

"The extraordinary scale of central bank interventions in the second half of March saw market sentiment rebound, and is likely to help investors' confidence in April."

Laura Suter, personal finance analyst at investment platform AJ Bell, said the IA's figures were unsurprising: "March was a hairy month for investors with the FTSE 100 and S&P 500 both falling 13%, while the FTSE 250 index fell by 22%. Fund investors fared little better with 96% of the funds in the Investment Association universe handing investors a loss in the month.

"With this as the backdrop it's unsurprising that investors ditched funds, with £10bn pulled from funds during the month. Investors left equity markets in their droves, with £1.1bn pulled in the month, but fixed income markets were the biggest loser with £7.4bn redeemed in March."

The IA said the five best-selling fund sectors for 2020 were:

  1. Short Term Money Market: £1.7bn.
  2. UK All Companies: £965m.
  3. Volatility Managed: £257m.
  4. Standard Money Market: £164m.
  5. Other property: £94m.

Author spotlight

Christopher Copper-Ind

Christopher Copper-Ind is editor-in-chief of International Investment. Before this, he was editorial director of The Business Year, from 2014 to 2017.