Fixed income suffers record £3.7bn outflows in most volatile market in history

Passive funds see record inflows

As the coronavirus pandemic continues to wreak havoc on markets, fixed income suffered its worst month on record as investors pulled £3.7bn of capital, a figure 13x greater than its previous record, according to data from funds network Calastone.

The outflows from March alone saw the accumulated inflows of the preceding eight months wiped out, as investors reacted to the sharply widening yield spreads in the sector, an acute dollar liquidity squeeze and quarter-end portfolio rebalancing. Vanguard's bond ETF discount exceeds 6% Selling activity in fixed income was more than twice as large as buying, falling to a Fund Flow index (FFI) reading of 30.4 (where 50 means buying is equal to selling), an unprecedented figure. Across the industry, investors redeemed a record £3.1bn, an amount three times as great as June 2016, the pr...