UK investors put £1.4 billion into funds in January in a more positive start to 2023, following December’s outflow of £281 million, according to data published today by the Investment Association (IA).
Key findings for January 2023 include:
- Bond funds saw the highest inflows in January at £1.6 billion, up from £392 million in December.
- Equity funds saw outflows increase to £913 million from last month’s £355 million, largely driven by outflows from UK equities at £1.4 billion. European equityoutflows softened to £155 million, the smallest outflow since February 2022, when Russia invaded Ukraine. The North America and Asia regions both saw inflows at £363 million and £133 million respectively.
- North America remained the bestselling IA sector for the third month in a row, with inflows of £364 million. UK All Companies saw the highest outflow for the third month in a row at £1.3 billion, a slight increase from December’s £1 billion outflow.
- Tracker funds continued to see inflows this month at £982 million.
- Responsible investment funds returned to outflow at £259 million following weaker net retail sales in the last quarter of 2022.
Chris Cummings, Chief Executive of the Investment Association, said:
“2023 set off with a strong inflow into funds of £1.4 billion, following ten months of net retail outflows in 2022. Inflows in January were largely driven by bonds, with UK Gilts and Corporate and Government Bond dominating the bestselling IA sectors, as investors gravitate back towards secure and high-grade bonds. We can expect to see a stronger year ahead for bond investors, with higher fixed interest rates available as we transition out of a low interest rate environment. On the other hand, UK equities saw the worst outflow since January 2022. The negative news cycle on the health of the UK economy may be impacting investor sentiment towards the UK.”
“However, against a challenging economic backdrop, investing for the long-term has never been more important, and the FTSE rally – a record start to the year – demonstrates the value of staying invested for the long haul in order to reap the future benefits of investing.”
FUNDS UNDER MANAGEMENT AND NET SALES
| Funds Under Management | Net Retail Sales | Net Institutional Sales | |
| January 2023 | £1.4 trillion | £1.4 billion | -£5.3 billion |
| January 2022 | £1.6 trillion | -£1.2 billion | -£3.7 billion |
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for January 2023 were:
- North America with net retail sales of £364 million.
- £ Corporate Bond was second with net retail sales of £290 million.
- UK Gilts followed with net retail sales of £288 million.
- Corporate Bond was fourth this month with net retail sales of £127 million.
- Government Bond was fifth with net retail sales of £127 million.
The worst-selling Investment Association sector in January 2023 was UK All Companies, which experienced outflows of £1.3 billion.
NET RETAIL SALES BY ASSET CLASS
Fixed Income funds saw inflows of £1.6 billion.
Mixed Asset funds saw inflows of £812 million.
Money Market saw inflows of £54 million.
Property funds experienced £26 million in inflows.
Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) saw £125 million in outflows.
Equity funds saw outflows of £913 million.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
North America funds saw net retail inflows of £363 billion.
Asia funds saw inflows of £133 million.
Japan saw outflows of £27 million.
Global funds saw outflows of £84 million.
Europe funds saw outflows of £155 million.
UK funds saw outflows of £1.4 billion.
TRACKER FUNDS
Tracker funds saw net retail inflows of £982 million in January 2023. Tracker funds under management stood at £295 billion at the end of January. Their overall share of industry funds under management was 20.9%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail outflow of £259 million in January 2023. Responsible investment funds under management stood at £95 billion at the end of January. Their overall share of industry funds under management was 6.7%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
Gross retail sales for UK fund platforms totalled £11.4 billion, representing a market share of 49.2%.
Gross retail sales through other UK Intermediaries including IFAs totalled £ 6.6 billion, representing a market share of 28.4%.
Gross retail sales for Discretionary Manager totalled £2.1 billion, representing a market share of 8.9%.
Direct gross retail sales totalled £851 million, representing a market share of 3.7%.
In January, Execution only intermediaries totalled £102 million in gross retail sales and accounted for 0.4% of the market.
