• Investors pulled £870m from equity funds in January
• Absolute Return funds lose £3.4bn since last summer
• Fund managers will be praying for an ‘ISA season’ bounce
Laura Suter, personal finance analyst at investment platform AJ Bell, comments:
“The epic outflows seen in December where stemmed slightly in January, but investors still pulled a net £859m from funds overall. Fund managers will be praying for an ISA season bounce to boost sales in the coming months, but with fears around the Brexit outcome and general nervousness in markets, they may prove disappointed.
“The direction of stock markets was undoubtedly the main concern for investors, with £870m pulled from equity funds, while fixed income and multi-asset funds saw inflows overall. Outflows from European equity funds ramped up to their highest level since the ‘Leave’ vote in 2016, with £412m withdrawn from the funds. Meanwhile UK funds saw £135m of outflows, however, this is a significant improvement on previous months.
“Investors are clearly concerned by what the next step the ‘unreliable boyfriend’ Mark Carney will take with interest rates, once the resolution of Brexit is clearer. The outflows from UK Corporate Bond funds were the highest in more than three years, at £491m. Instead, investors flooded into strategic bond funds last month, deferring the decision about bond allocation to fund managers, with £801m flowing into the funds – the highest inflows in a year.
“Targeted Absolute Return funds marked their seventh straight month of outflows, with £3.4bn pulled from the funds in that time. A clear example of this is in the figurehead of the sector, Standard Life GARS, which has seen its funds under management slump to £10.5bn.
“As for the bright spots, North America rebounded after a flood of outflows last month, with these funds taking in £142m in January – but this only goes some way to making up for the £250m pulled from the funds in December. Japan and global funds were the only other areas to see significant inflows.”