Funds hit by £10bn outflows in March when lockdowns began
Thursday 7 May 2020
Retail funds experienced record net retail outflows of £10 billion in March 2020 as investors reacted to international lockdown measures, according to latest figures published today by the Investment Association (IA). The other key findings:
- Fixed Income funds were the worst-selling asset class in March, with £7.4 billion in net retail outflows.
- UK equity funds returned to inflows, with net retail sales of £747 million in March, while all other equity regions experienced outflows.
- Short Term Money Market was the best-selling IA sector in March, with net retail sales of £1.7 billion - which suggests the value in those funds will be re-deployed in April.
- Responsible investment funds remained resilient in March, with £113 million in net retail sales.
Chris Cummings, Chief Executive of the Investment Association, said:
“With the fastest switch to a bear market in history, the introduction of global lockdown measures designed to fight coronavirus held significant sway over the fund market in March, with a record £10 billion of retail savings flowing out of funds.
“Investors generally avoided taking money out of equity funds at low valuations. Instead, the focus was on bond funds as portfolios were re-balanced and some sought safety in cash.
“The extraordinary scale of central bank interventions in the second half of March saw market sentiment rebound, and is likely to help investors’ confidence in April.”
FUNDS UNDER MANAGEMENT AND NET SALES
|Funds Under Management
|Net Retail Sales
|Net Institutional Sales
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for March 2020 were:
- Short Term Money Market was first with net retail sales of £1.7 billion.
- UK All Companies was second with net retail sales of £965 million.
- Volatility Managed followed with net retail sales of £257 million.
- Standard Money Market was fourth with net retail sales of £164 million.
- Property Other was fifth with net retail sales of £94 million.
The worst-selling Investment Association sector in March 2020 was £ Strategic Bond with an outflow of £1.9 billion.
NET RETAIL SALES BY ASSET CLASS
Money Market was the best-selling asset class in March 2020 with £1.3 billion in net retail sales.
Property was the second best-selling asset class, with £3 million of inflows.
All other asset classes experienced outflows in March 2020.
Mixed Asset funds experienced £1 billion of inflows.
Equity funds were next with £1.1 billion of net retail outflows in March.
Other (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) saw £1.7 billion in net retail sales.
Fixed Income funds were the worst selling asset class, with net retail outflows of £7.4 billion.
NET RETAIL SALES OF EQUITY FUNDS BY REGION*
UK was the best-selling equity fund region in March 2020, with net retail sales of £747 million.
All other equity regions experienced outflows in March 2020.
Asia funds saw net retail outflows of £179 million.
Europe funds saw net retail outflows of £240 million in March.
North America funds experienced net retail outflows of £256 million, while Japan funds saw net retail sales of £372 million.
Global funds experienced net retail outflows of £1.3 billion.
Tracker funds saw a net retail inflow of £467 million in March 2020. Tracker funds under management stood at £199 billion as of the end of March. Their overall share of industry funds under management was 17.8%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail inflow of £113 million in March 2020. Responsible investment funds under management stood at £25 billion as of the end of March. Their overall share of industry funds under management was 2.3%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
In March, gross retail sales for UK fund platforms totalled £15.8 billion, representing a market share of 50%.
Gross retail sales through Other UK Intermediaries including IFAs were £8.7 billion, representing a market share of 28%.
Direct gross retail sales in March were £2.3 billion, representing a market share of 7%.
Notes to Editors:
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:
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, Old Mutual Wealth 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.
For further information, please contact:
Katie Martin, Head of Communications: [email protected]
T: +44 (0)20 7269 4655
Helen Ayres, Communications Manager: [email protected]
T: +44 (0)20 7269 4620
David Parton, Communications Executive: [email protected]
T: +44 (0)20 7269 4625
IA press office: [email protected]
T: 020 7269 4696
About the Investment Association (IA):
- The IA champions UK investment management, supporting British savers, investors and businesses. Our 250 members manage £7.7 trillion of assets and the investment management industry supports 115,000 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 37% of all assets managed in Europe.