Retail investors cashed in £3.94 billion of equity funds as market panic set in at the start of the year, new analysis* from leading behavioural finance experts Oxford Risk shows.
Its analysis shows net retail sales of equity funds in the first three months of the year were minus £3.94 billion, underlining the scale of the reaction by retail investors to market volatility following policy changes from the Trump administration.
Equity funds were the hardest hit with Money Market Funds seeing £1.262 billion in net retail sales across the period. The analysis of Investment Association data shows net retail sales of funds across all sectors were minus £2.96 billion.
Mixed asset funds recorded positive net retail sales of £634 million in the period with all other sectors, including ISAs and property, recording negative net retail sales.
The worst-selling sector ranked by the Investment Association in each of the last three months was UK All Companies, while the bestselling sectors have been Volatility Managed in January, Global in February and Short-Term Money Market in March.
Recent volatility sparked by the US administration’s tariff policy is likely to have driven more selling. The VIX index** which measures volatility, hit 52.533 in early April. A measure above 30 is seen as high volatility.
Oxford Risk warns that knee-jerk emotional reactions to market swings cost investors an average of 3% each year in returns and worries that losses could soar this year.
It says behaviourally-driven financial advice software can help investors and advisers avoid emotional mistakes which typically include chasing current and popular themes, trading stocks too much, and selling when markets are falling.
Advisers and wealth managers can play a significant role in helping investors, but they need better technology to deliver more personalised support for clients during heightened volatility.
James Pereira-Stubbs, Chief Client Officer at Oxford Risk said: “Retail investors have understandably been caught up in the market panic and the £3.94 billion pulled out of equity funds shows that.
“Markets are likely to remain volatile for the foreseeable future as investors react to the latest news whether it is regarded as good or bad with the views often changing during the trading day.
“Retail investors need to focus on their long-term financial plans and not rush to buy or sell based on macroeconomic news and policy decisions which can and have changed very quickly.
“Advisers need technology support so they can provide personalised engagement that helps people get invested, stay invested, and make better decisions throughout their journey. By addressing individual needs and behaviours, financial firms can turn missed opportunities into better outcomes for investors.”
Oxford Risk’s white paper, Behavioural Engagement Technology: Using technology to understand, map, and improve engagement in personal finance outlines how using AI and machine learning to engage investors can improve financial outcomes and grow assets under management for advisers by 10% or more.
Guides available on Oxford Risk’s website for financial advisers and wealth managers outline how using technology and behavioural science enables firms to tailor services more efficiently whilst communicating with clients more effectively.
The company, which develops software to help financial services firms support clients in navigating complexity, uncertainty, and behavioural biases, has created proprietary algorithms that rank products, communications, and interventions based on their suitability for each client at any given time.
