Fund sales suffer as UK investors remain cautious due to political uncertainty

UK regulated fund products continued to suffer large outflows for the fifth month in a row as UK retail investors remain cautious about economic and political unrest within Europe.

According to Investment Association (“IA”) data, European and UK equity funds were the most affected by these concerns, enduring net retail losses of £453 million and £236 million respectively during February. Outflows for UK equity funds now total £6.6 billion since September 2018, whilst European equity funds have now undergone 11 consecutive months of net redemptions.

Instead, retail investors appear to be turning towards the relative shelter of mixed assets and global equities, with such funds attracting monthly inflows of £385million and £282 million correspondingly during February. Asian Funds were the next best-selling, raking in £167 million.

It was however, not only UK retail savers that shunned UK authorised fund products. It seems that UK-based institutional investors are also feeling the fear, having withdrawn £892 million over the month.

When you compare net retail sales of £1 billion and net institutional sales of £2.3 billion that the UK industry collected this time last year in comparison to the net withdrawals of £156 million seen throughout February 2019, it is clear to see the full degree of investor apprehension.

According to the latest Fund Flow Index (“FFI”) generated by Calastone, the London-based fund transaction network, this anxiety and disinclination to invest in equity products has continued into the month of March.

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All figures correct as at 31.12.2020.