UK investors returned to the fund markets in March 2024, resulting in inflows to the tune of £446 million, according to data published by the Investment Association (IA) – the first inflow to the fund market since last April. These inflows followed a difficult month in February where investors took £2.7 billion from funds.
Key findings for March 2024 – Global was the best-selling IA sector
- Global was the best-selling IA sector, with inflows totalling £842 million in March.
- Fixed Income funds saw significant inflows in the month, with £809 million invested. However, data also showed allocations to Fixed Income are starting to plateau as investors anticipate a cut to rates in 2024 and other asset classes begin to regain both popularity and strength. Equities also saw inflows of £149 million – the first inflow since December 2021.
- Mixed Asset continues to see outflows of £272 million, albeit at a milder rate from £975 million in February.
- Responsible Investments again saw a sharp rise in outflows, rising to £329 million from just £1 million in February.
- Tracker funds maintained steady inflows of £2,9 billion, up a further £800 million from February (£2.1 billion).
Key highlights from Q1 2024
- Q1 experienced a bumpy start with heavy outflows in January and February of £1.1 billion and £2.7 billion, respectively. March has seen a change in sentiment, boosted by the end of the ISA season, but it will need to be seen if this signals a marked return to inflows.
- Inflows to US equities in Q1 2024 rose to £1.5 billion, more than doubling the inflows of Q4 2023 which saw £625 million invested. This has been driven by the dominance of the Magnificent Seven and advisers and wealth managers choosing US stocks if they re-allocate into equities.
- Tracker funds saw steady sales culminating in an inflow of £6.6 billion, which was boosted by a return in investor appetite for equities. This contrasts with overall outflows for the quarter of £3.3 billion.
Monthly Net Retail Sales by Asset Class 
Spotlight on Responsible Investing:
Responsible investing faces continued challenges among investors, with IA data showing three consecutive quarters of outflows from responsible investment funds invested in equities and mixed assets.
Monthly Net Retail Sales to Responsible Investment Funds
Miranda Seath, Director, Market Insight & Fund Sectors at the Investment Association, said:
“Inflationary pressures eased towards the end of 2023, and alongside expectations of interest rate cuts, this resulted in a more optimistic outlook among investors. Whilst inflation continues to fall, expectations of rate cuts have been scaled back quite dramatically in April, following recent data that suggests inflation will take longer to fall back to target levels. It remains to be seen how investors will react to this, which coincides with continued geopolitical tensions.
“Markets have not yet wobbled at escalating geo-political tensions and there are growing signs of investor confidence boosted by sales bump as investors look to top up their ISA allowances before the end of the tax year. As equity performance improves, particularly in the US we have seen Funds under management rise: FUM is up 3% in Q1 and 11% from the recent low at the end of October. North America equity funds performed particularly strongly in the first quarter of the year with high inflows of £1.5 billion born out of stronger growth rates in the US. the dominance of The Magnificent Seven stocks, as well as the Federal Reserve’s monetary policy decisions helping to tame inflation, which has fallen faster in the US than in the UK and Europe.”
