The coronavirus-induced market sell-off caused almost £1.6bn of outflows from equity funds in just one week, according to Calastone's February Fund Flow Index (FFI), as global stockmarkets suffered their biggest drawdown since the throes of the 2008 Global Financial Crisis.
Some 98% of outflows in the final five days of the month came from actively-managed equity funds; positive investor sentiment during the first three weeks of the month helped to offset this though, with net outflows of £348m over the course of the month.
Global equity funds were the hardest hit, having suffered the worst month on Calastone's record with net outflows of £309m. During the final five days of February alone, £881m flowed out of the sector, while Asian, European and specialist regional funds were also hard hit by virus fears.
Most of February's outflows came from institutional investors, according to Calastone's research, who were net sellers over the course of the month while retail investors were net buyers.
The firm said this is likely to be the result of regular savings plans embedded in retail investor accounts, which was further supported by the fact passive funds suffered far smaller outflows over the final week of the month at £25m.
Overall, passive equity funds saw £832m of inflows in February.
Edward Glyn, Calastone's head of global markets, said: "Fear ate greed for lunch in the last few days of February, as equity funds saw outflows at their most ferocious in five years. After an initial flurry of outflows in January, funds benefited from extreme complacency over the coronavirus outbreak.
"But the news that the epidemic had taken hold in Italy and then quickly spread across the world caused a dramatic reassessment of its potential impact on the global economy. Investors have voted with their feet."
That said, UK equities were relatively unscathed, having seen inflows of £227m over February and seeing just £107m of outflows on the last day of the month, when the FTSE 100 index sank to a five-year low.
Elsewhere, fixed income and multi-asset funds saw modest net inflows in February, but alternatives, commodity funds, open-ended property funds and absolute return vehicles all suffered outflows. These funds did experience inflows in the final week of the month, however, as investors flocked to safe haven assets.
According to Calastone, February 2020 was only the fourth month on record to see net outflows across all asset classes, with the last time being October 2016
Glyn added: "The curiously relaxed approach to funds focused on UK equities reflected the limited number of infections, as well as the extremely low valuations for UK shares. That was enough to keep the sellers at bay for a time, but by the last day of the month there were signs of capitulation even for this sector too."