Funds hit by £7.6bn outflows, as economic uncertainty intensifies following ‘mini budget’ says The Investment Association

by | Nov 3, 2022

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UK savers took £7.6 billion out of funds in September 2022, in the eighth month of net retail outflows this year, according to data published today by the Investment Association (IA). This is the second highest ever outflow from retail funds, after March 2020 when outflows hit £9.7 billion.

Other key findings for September 2022 include:

  • Equity funds experienced almost £5 billion in outflows, the highest monthly outflow on record, driven by outflows from global equities of £2 billion. UK equity funds saw outflows of £1.3 billion.
  • UK gilts was the best-selling IA sector this month, with net retail sales of £412 million, and UK Index Linked Gilts was second with inflows of £202 million, despite turbulence in the gilt markets.
  • Responsible investment funds received outflows of £211 million for the first time since February 2021. Tracker funds also saw modest outflows of £264 million, only the second monthly outflow in 2022.
  • Fixed income funds and Mixed asset funds also saw outflows of £612 million and £785 million respectively.

Chris Cummings, Chief Executive of the Investment Association, said: “The political and economic uncertainty over the last few months came to a head with the fiscal policy announced in the ‘mini budget’ in late September. The resulting market turmoil contributed to investors pulling £7.6 billion from funds, the second highest monthly outflow on record. Outflows from equity funds have been increasing month on month, as economies globally continue to slow and central banks maintain their cycle of rate hikes.

“Despite the historic rise in UK gilt yields following the mini budget, which caused gilt prices to plummet, UK gilts was the highest selling sector this month as some investors saw opportunity amidst the turbulence. We have seen outflows from funds in eight of the first nine months of 2022, and while volatile markets can provide opportunities, investors are still waiting for a period of relative market and economic stability.”    

FUNDS UNDER MANAGEMENT AND NET SALES 

                                 Funds Under Management  Net Retail Sales  Net Institutional Sales  
September 2022   £1.3 trillion -£7.6 billion -£6.1 billion
September 2021 £1.5 trillion £2.4 billion-£2.2 billion

BEST SELLING INVESTMENT ASSOCIATION SECTORS   

The five best-selling Investment Association sectors for September 2022 were: 

  1. UK Gilts with net retail sales of £412 million. 
  2. UK Index Linked Gilts was second with net retail sales of £202 million. 
  3. Volatility managed followed with net retail sales of £139 million. 
  4. Infrastructure was fourth this month with net retail sales of £134 million. 
  5. Global equity income was fifth with net retail sales of £126 million.  

The worst-selling Investment Association sector in September 2022 was Global, which experienced outflows of £1.3 billion.  

NET RETAIL SALES BY ASSET CLASS

All asset classes saw outflows in September,

Property funds experienced £166 million in outflows.

Money Market funds also experienced outflows, at £422 million.

Fixed Income funds saw outflows of £612 million.

Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) saw £643 million in outflows.

Mixed Asset funds saw outflows of £785 million.

Equity funds saw outflows of £5 billion.

NET RETAIL SALES OF EQUITY FUNDS BY REGION* 

All equity regions experienced outflows this month.

Japan funds saw outflows of £112 million.

Asia funds saw outflows of £204 million.

Europe funds saw outflows of £395 million.

North America funds saw net retail outflows of £648 million.

UK funds saw outflows of £1.3 billion.

Global funds saw outflows of £2 billion.

TRACKER FUNDS 

Tracker funds saw net retail outflows of £264 million in September 2022. Tracker funds under management stood at £271 billion at the end of September. Their overall share of industry funds under management was 20.4%.

RESPONSIBLE INVESTMENT FUNDS 

Responsible investment funds saw a net retail outflow of £211 million in September 2022. Responsible investment funds under management stood at £86 billion at the end of September. Their overall share of industry funds under management was 6.5%.

GROSS RETAIL SALES BY DISTRIBUTION CHANNEL 

Gross retail sales for UK fund platforms totalled £10.0 billion, representing a market share of 50.9%.

Gross retail sales through other UK Intermediaries including IFAs totalled £5.5 billion, representing a market share of 28.1%.

Direct gross retail sales totalled £759 million, representing a market share of 3.9%.

In September, Execution only intermediaries totalled £137 million in gross retail sales and accounted for 0.7% of the market.

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