UK investors pull near-record £4.5 bn from funds, with equity taking biggest hit

Investors responding to ‘intensifying economic uncertainty’ pulled £4.5 bn ($5.4 bn) from UK funds, according to the latest data from the Investment Association (IA).

That June outflow figure is the highest of the year and the second-highest on record, with the IA noting that equity funds took the biggest hit: £2.3 bn in outflows. The IA says this largely came out of globally diversified equity funds, which experienced outflows of £1.3 bn. This marks the biggest outflow since the aftermath of the 2016 Brexit referendum vote.

‘All major asset classes experienced outflows in June as investors continue to adjust to the end of the low interest rate era,’ says Chris Cummings, chief executive of the IA, in a statement. ‘Savers are pre-empting slowing economic growth and preparing for further interest rates rises as we enter new territory for markets.

‘Higher rates mean a weaker performance outlook for the high-growth companies that helped to fuel the bull market of the last decade. This month’s equity fund outflows indicate that investors are looking at ways to better balance their savings.’

Regionally, Japan was the best-selling equity fund region in June 2022, with net retail sales of £15 mn, while all other equity regions experienced outflows.

According to the IA:

1. Global funds saw net retail outflows of £1.3 bn
2. UK funds saw outflows of £690 mn
3. Europe funds saw outflows of £445 mn
4. Asia funds saw outflows of £272 mn
5. North America funds saw outflows of £12 mn.

‘While the current market environment presents challenges, it is more important than ever for investors to maintain a long-term view of their investments in order to realize their savings goals,’ adds Cummings.

Despite the exodus from equity funds, responsible investment funds maintained their popularity, with net retail sales of £71 mn in June 2022, though that was down from the previous month when investors poured £1.6 bn into such funds.