Intense market uncertainty around rising inflation and tensions between Russia and Ukraine saw outflows from retail funds accelerate to £2.5 billion in February 2022, up from £1.2 billion in January, according to data published today by the Investment Association (IA).
Other key findings for February 2022 include:
- Fixed Income funds saw outflows of £2.4 billion, as bond investors responded to rapidly rising inflation in the UK and other developed markets.
- North America was the best-selling IA sector in February with inflows of £570 million. At the same time the largest IA sector by funds under management – Global – experienced a small outflow of £3.4 billion.
- Tracker fund inflows doubled in February, reaching £1.3 billion – up from £672 million.
- Responsible investment funds saw reasonable net retail inflows of £670 million despite challenging market conditions.
Chris Cummings, Chief Executive of the Investment Association said:
“High inflation and growing economic uncertainty provided an uncomfortable backdrop for escalating tensions between Russia and Ukraine throughout February. Russia’s invasion of Ukraine contributed to already strong market turbulence, which saw £2.5 billion of retail savings flowing out of funds in February.
“Outflows from equity funds calmed in comparison to January, with investors instead focusing on taking money out of bond funds as inflation continued to rise. The full economic impact, including the long-term market impacts of western sanctions and supply chain disruption, will only become clear in the months ahead.”
FUNDS UNDER MANAGEMENT AND NET SALES
|Funds Under Management||Net Retail Sales||Net Institutional Sales|
|February 2022||£1.5 trillion||-£2.5 billion||-£840 million|
|February 2021||£1.4 trillion||£2.3 billion||-£2.2 billion|
BEST SELLING INVESTMENT ASSOCIATION SECTORS
The five best-selling Investment Association sectors for February 2022 were:
1. North America with net retail sales of £570 million.
2. Mixed Investment 40-85% Shares was second with net retail sales of £256 million.
3. Global Emerging Market Bond – Hard Currency followed with net retail sales of £250 million.
4. Short Term Money Market was fourth with net retail sales of £245 million.
5. Volatility Managed was fifth with £213 million.
The worst-selling Investment Association sector in February 2022 was UK All Companies, which experienced outflows of £503 million.
NET RETAIL SALES BY ASSET CLASS
Money Market funds was the best-selling asset class in February 2022, with £139 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 £25 million of inflows.
Equity funds saw £47 million in outflows in February 2022.
Property was fourth with outflows of £75 million.
Mixed Asset saw £182 million in outflows in February 2022.
Fixed Income funds saw £2.4 billion of outflows.
NET RETAIL SALES OF EQUITY FUNDS BY REGION
North America was the best-selling equity fund region in February 2022, with net retail sales of £588 million.
Global was second with net retail sales of £322 million.
All other equity regions experienced outflows.
Asia funds saw £141 million in outflows, while Europe funds saw outflows of £142 million.
Japan funds saw outflows of £156 million, and UK funds saw outflows of £990 million.
Tracker funds saw a net retail inflow of £1.3 billion in February 2022. Tracker funds under management stood at £289 billion as of the end of February. Their overall share of industry funds under management was 19.3%.
RESPONSIBLE INVESTMENT FUNDS
Responsible investment funds saw a net retail inflow of £670 million in February 2022. Responsible investment funds under management stood at £82 billion as of the end of February. Their overall share of industry funds under management was 5.5%.
GROSS RETAIL SALES BY DISTRIBUTION CHANNEL
In February, gross retail sales for UK fund platforms totalled £13.3 billion, representing a market share of 52.7%.
Gross retail sales through Other UK Intermediaries including IFAs were £6.6 billion, representing a market share of 26.2%.
Direct gross retail sales in February were £1 billion, representing a market share of 4.1%.