05
May
2022

Fund outflows mount as uncertainty rises

Investors' response to tightening monetary policy in major markets and Russia's invasion of Ukraine saw the third consecutive month of outflows from retail funds, up from £2.5 billion in February to £3.4 billion in March, according to data published today by the Investment Association (IA).

Other key findings for March 2022 include:

  • Fixed Income funds saw outflows of £3.3 billion, as persistently high inflation and tightening monetary policy threatened to undermine investors' returns.
  • European Equity funds saw outflows of £505 million, up from £142 in February, reflecting the region's economic exposure to Russia's invasion of Ukraine.
  • Mixed Investment 40-85% Shares was the bestselling IA sector in March with inflows of £579 million, as savers sought diversified investments amidst market volatility ahead of April's ISA allowance deadline.
  • Responsible Investment funds saw their strongest monthly inflows so far in 2022, accelerating from £670 million in February to £935 million in March.

Chris Cummings, Chief Executive of the Investment Association, said:

“Investors remained cautious in March in light of monetary tightening and Russia’s invasion of Ukraine. Although Russia launched its invasion of Ukraine in February, the economic ramifications of the conflict became clearer in March. Outflows from European Equity funds accelerated sharply to £505 million, as investors considered the risks of Europe's dependence on Russian commodities.  

“However, March was a story in two parts and outflows were balanced by many investors rushing to use their ISA allowance and seeking potentially safer havens in diversified funds, with multi-asset strategies benefiting in particular. Inflows to Responsible investment funds continued to be a bright spot, recording their strongest monthly inflows so far in 2022 and demonstrating investors' commitment to sustainable investing.”

FUNDS UNDER MANAGEMENT AND NET SALES 

                                 

Funds Under Management  

Net Retail Sales  

Net Institutional Sales  

March 2022   

£1.5 trillion 

-£3.4 billion 

£2.5 billion

March 2021 

£1.5 trillion 

£4.6 billion

-£1.4 billion 

BEST SELLING INVESTMENT ASSOCIATION SECTORS   

 The five best-selling Investment Association sectors for March 2022 were: 

  1. Mixed Investment 40-85% Shares with net retail sales of £579 million.
  2. Volatility Managed was second with net retail sales of £475 million.
  3. Global Equity Income followed with net retail sales of £475 million.
  4. Government Bond was fourth with net retail sales of £237 million.
  5. Infrastructure was fifth with £173 million.  

The worst-selling Investment Association sector in March 2022 was £ Strategic Bond, which experienced outflows of £528 million. 

NET RETAIL SALES BY ASSET CLASS 

Mixed Asset funds was the best-selling asset class in March 2022, with £429 million in net retail sales. 

Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) was the second best-selling asset class, with £412 million of inflows. 

Property saw £119 million in outflows in March 2022.

Equity funds was fourth with outflows of £309 million.  

Money Market funds saw £571 million in outflows in March 2022.

Fixed Income funds saw £3.3 billion of outflows.

NET RETAIL SALES OF EQUITY FUNDS BY REGION* 

North America was the best-selling equity fund region in March 2022, with net retail sales of £83 million.

Japan was second with net retail sales of £10 million. 

All other equity regions experienced outflows.

Asia funds saw £79 million in outflows, while Global funds saw outflows of £163 million.

Europe funds saw outflows of £505 million, and UK funds saw outflows of £563 million.

TRACKER FUNDS 

Tracker funds saw a net retail inflow of £1.2 billion in March 2022. Tracker funds under management stood at £299 billion as of the end of March. Their overall share of industry funds under management was 19.6%. 

RESPONSIBLE INVESTMENT FUNDS 

Responsible investment funds saw a net retail inflow of £935 million in March 2022. Responsible investment funds under management stood at £86 billion as of the end of March. Their overall share of industry funds under management was 5.7%. 

GROSS RETAIL SALES BY DISTRIBUTION CHANNEL 

In March, gross retail sales for UK fund platforms totalled £15.9 billion, representing a market share of 52.7%.  

Gross retail sales through Other UK Intermediaries including IFAs were £6.9 billion, representing a market share of 22.9%.  

Direct gross retail sales in March were £1.4 billion, representing a market share of 4.6%.

ENDS 

 

For further information, please contact: 

Katie Martin, Head of Communications: [email protected] 

T: +44 (0)20 7269 4625 

IA press office: [email protected] 

Notes for Editors  

This data includes the six new sectors launched from the Investment Association’s (IA) Global and Specialist sectors on Monday 13 September 2021. 

Currently, the two sectors are among the largest within the classification scheme, with 471 funds included within the IA Global sector and 332 in the IA Specialist sector. As the retail fund market evolves and grows, the creation of the new sectors will help investors to more easily find similar types of funds. The decision to create the new sectors was taken by the IA Sectors Committee after a public consultation with the industry and sector users.  

New country - regional equity sectors:  

  • Latin America
  • India/Indian Subcontinent

Industry sectors: 

  • Financials and Financial Innovation
  • Healthcare

Alternative investment approaches: 

  • Infrastructure
  • Commodity/Natural Resources

To see a breakdown of the data referenced in this press release, please see all of the tables here

The Investment Association's figures for fund sales cover retail and institutional sales in authorised unit trusts and open ended investment companies (OEICs) provided by our membership to UK investors. The figures do not include investment trusts and ETFs. 

Each month small revisions to figures have been made since the previous press release. This reflects additional information received by The Investment Association. 

Net retail sales comprise total retail sales minus repurchases (including switches between funds), thus the figures can result in a negative figure or outflow. 

* Regional breakdown for equity funds 

The following Investment Association sectors have been grouped together to compile the figures for regional equity sales: 

Asia

Europe

Global

Japan

North America

UK

Asia Pacific excl. Japan

Europe excl. UK

Global

Japan

North America

UK All Companies

Asia Pacific incl. Japan

Europe incl. UK

Global Emerging Markets

Japanese Smaller Companies

North America Smaller Companies

UK Equity Income

China/Greater China

Europe Smaller Companies

Global Equity Income

 

 

UK Smaller Companies

India/Indian Subcontinent

 

Specialist

 

 

 

 

 

Healthcare

 

 

 

 

 

Technology and Techology innovation

 

 

 

 

 

Financials and Financial innovation

 

 

 

 

 

 

 

 

 

Direct Channels 

Direct includes sales forces and tied agents, private clients and other direct to investor sales without intermediation. 

** The Investment Association’s ISA figures are based on information collected from fund companies and five fund platforms (AEGON, Fidelity, Hargreaves Lansdown, Quilter, and Transact) where they are the ISA provider. Fund business through other ISA providers such as wealth managers is not included. The Investment Association’s figures cover about three-quarters of the whole of the market for funds held in ISAs. 

About the Investment Association (IA): 

The IA champions UK investment management, supporting British savers, investors and businesses. Our 270 members manage £9.4 trillion of assets and the investment management industry supports 114,000 jobs across the UK. 

Our mission is to make investment better. Better for clients, so they achieve their financial goals. Better for companies, so they get the capital they need to grow. And better for the economy, so everyone prospers. 

Our purpose is to ensure investment managers are in the best possible position to: 

  • Build people’s resilience to financial adversity
  • Help people achieve their financial aspirations
  • Enable people to maintain a decent standard of living as they grow older
  • Contribute to economic growth through the efficient allocation of capital.

The money our members manage is in a wide variety of investment vehicles including authorised investment funds, pension funds and stocks and shares ISAs. 

The UK is the second largest investment management centre in the world, after the US and manages over a third (37%) of all assets managed in Europe.