UK savers took £24.3 billion out of funds in 2023, according to the year-end data published today by the Investment Association (IA). This is down from 2022’s outflow of £26.9 billion and is only the second year that an annual outflow has been recorded.
Key findings for 2023:
- Money Markets was the bestselling asset class, closing the year with £2.2 billion invested overall. Fixed Income was second, with an inflow of £716 million.
- UK Gilts saw £2.5 billion invested, while investors put £2 billion into Government Bonds as investors have been enticed by higher yields in 2023.
- Inflows to Tracker funds remained strong at £13.8 billion with only one month of outflow 2023 in a tough year overall for fund sales. Outflows from active funds reached £38.1 billion in 2023.
- Equity funds faced a challenging year, experiencing £22 billion in outflows. This was largely driven by UK equities, which saw £14 billion in outflows in the eighth consecutive year of outflows.
- Responsible Investment funds experienced declining sales throughout the year reaching a £3 billion outflow.
- Volatility Managed was 2023’s best-selling sector with inflows of £2.7 billion across the year.
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:
“The cost-of-living crisis and economic uncertainty has continued to impact households across the UK, with investors withdrawing just under £24.3 billion from funds. The impact of higher interest rates was a key factor in retail investor activity and decision-making. Cash savings accounts offered attractive interest rates for the first time in over a decade, impacting net retail sales.
“Investors showed caution, opting for a flight to safe assets in UK gilts and Government bonds, which also saw rising yields in 2023, Money Market funds came out on top as the best-selling asset class, and investors also opted for low-cost tracker funds, which saw strong inflows of £14 billion.
“Meanwhile, equity funds faced a challenging year. UK equities hit a record outflow at £14 billion in the eighth consecutive year of outflows. Responsible investment funds saw flat sales in the first half of the year and experienced a decline in popularity towards the end of 2023.
“As we look ahead, we will see how UK investors respond to market shifts in 2024. When, how fast and how far Central Banks cut interest rates remains crucial. In January, investors took out £1 billion out of funds, however Tracker funds continued to see strong inflows at £1.7 billion. It is also an election year in the US, India and UK, and political change could impact the investment outlook. However, the impact of the market shocks we saw in 2022 have dissipated to a large extent.”
FUNDS UNDER MANAGEMENT AND NET SALES – END OF YEAR 2023
| Funds Under Management | Net Retail Sales | Net Institutional Sales | |
| 2023 | £1.4 trillion | -£24.3 billion | -£33.5 billion |
| 2022 | £1.4 trillion | -£26.9 billion | -£23.4 billion |
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for 2023 were:
- Volatility Managed with net retail sales of £2.7 billion.
- UK Gilts with net retail sales of £2.5 billion.
- Government Bond followed with net retail sales of £2.0 billion.
- Short Term Money Market with net retail sales of £1.5 billion.
- Global was fifth with net retail sales of £1.2 billion.
The worst-selling Investment Association sector in 2023 was UK All Companies, which experienced outflows of £10.2 billion.
NET RETAIL SALES BY ASSET CLASS
Money Market saw inflows of £2.2 billion.
Fixed Income saw inflows of £716 million.
Others saw outflows of £45 million.
Property saw £644 million in outflows.
Mixed Asset saw outflows of £4.1 billion.
Equity funds saw outflows of £22.4 billion.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
Japan funds experienced inflows of £466 million.
Asia funds saw net retail outflows of £73 million.
North America funds saw outflows of £379 million.
Global funds saw net retail outflows of £908 million.
Europe funds saw outflows of £2.8 billion.
UK funds saw outflows of £13.6 billion.
TRACKER FUNDS
Tracker funds saw net retail inflows of £13.8 billion in 2023. Tracker funds under management stood at £324 billion at the end of 2023. Their overall share of industry funds under management was 22.7%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail outflow of £3 billion in 2023. Responsible investment funds under management stood at £102 billion at the end of 2023. Their overall share of industry funds under management was 7.2%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
Gross retail sales for UK fund platforms totalled £149 billion, representing a market share of 48.7%.
Gross retail sales through other UK Intermediaries including IFAs totalled £88 billion, representing a market share of 28.9%.
Gross retail sales for Discretionary Manager totalled £22 billion, representing a market share of 7.1%.
Direct gross retail sales totalled £12 billion, representing a market share of 4%.
In 2023, Execution only intermediaries totalled £1.9 billion in gross retail sales and accounted for 0.6% of the market.
FUNDS UNDER MANAGEMENT AND NET SALES – JANUARY 2024
| Funds Under Management | Net Retail Sales | Net Institutional Sales | |
| January 2024 | £1.42 trillion | -£1.1 billion | -£1.7 billion |
| January 2023 | £1.41 trillion | £398 million | -£4.7 billion |
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for January 2024 were:
- Short Term Money Market with net retail sales of £1.1 billion.
- Corporate Bond with net retail sales of £519 million.
- Volatility Managed followed with net retail sales of £215 million.
- Global with net retail sales of £200 million.
- Technology and Technology Innovation was fifth with net retail sales of £135 million.
The worst-selling Investment Association sector in January 2024 was UK All Companies, which experienced outflows of £753 million.
NET RETAIL SALES BY ASSET CLASS
Equity funds saw outflows of £1.5 billion.
Money Market saw inflows of £1.1 billion.
Mixed Asset saw outflows of £215 million.
Fixed Income saw outflows of £424 million.
Property saw £72 million in outflows.
Others saw outflows of £12 million.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
North America funds saw inflows of £63 million.
Japan funds experienced inflows of £22 million.
Asia funds saw net retail outflows of £43 million.
Europe funds saw outflows of £20 million.
Global funds saw net retail outflows of £69 million.
UK funds saw outflows of £1 billion.
TRACKER FUNDS
Tracker funds saw net retail inflows of £1.7 billion in January 2024. Tracker funds under management stood at £325 billion at the end of November. Their overall share of industry funds under management was 22.9%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail outflow of £394 million in January 2024. Responsible investment funds under management stood at £102 billion at the end of January. Their overall share of industry funds under management was 7.2%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
Gross retail sales for UK fund platforms totalled £12 billion, representing a market share of 48.8%.
Gross retail sales through other UK Intermediaries including IFAs totalled £6.8 billion, representing a market share of 27.3%.
Gross retail sales for Discretionary Manager totalled £1.6 billion, representing a market share of 6.3%.
Direct gross retail sales totalled £1.1 billion, representing a market share of 4.6%.
In January, Execution only intermediaries totalled £119 million in gross retail sales and accounted for 0.5% of the market.
