Every asset class suffers outflows in second worst month on record

Responsible investment holds up

James Baxter-Derrington
clock • 2 min read
Total funds under management have fallen on the previous year, down to £1.4trn from June 2021’s £1.5trn.
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Total funds under management have fallen on the previous year, down to £1.4trn from June 2021’s £1.5trn.

All asset classes experienced net outflows over June 2022 as investors continue to adapt to the changing market landscape, marking it the worst month this year and second worst on record.

According to figures from the Investment Association, investors pulled a net £2.3bn from equity funds, with globally diversified equity the worst performer, contributing £1.3bn of outflows alone.

IA chief executive Chris Cummings explained this flight from equities indicated investors were looking to "better balance their savings" as higher rates challenge the performance of high-growth companies.

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Money market funds also suffered outflows in excess of £1bn, with IA Short Term Money Market the worst selling IA sector, contributing £810m to the total £1.1bn outflows from the asset class.

Fixed income recorded roughly half that outflow figure, dropping £653m over the month, while mixed assets lost £268m, other funds, including targeted absolute return, volatility managed and unclassified, saw £185m of outflows, while property was the closest to the black, losing just £9m in outflows over June.

While every asset class struggled, responsible investment funds remained in positive territory, up £71m on the month, although this was still a significant drop on May's £1.6bn figure.

IA Volatility Managed was the best-selling sector for the period, recording net retail sales of £248m, followed by IA Global Equity Income (£189m), IA Mixed Investment 40-85% Shares (£112m), UK Gilts (£108m) and Infrastructure (£99m).

Cummings said this shift to lower-risk investments was a "bulwark against rising market uncertainty".

Emma Wall, head of investment analysis and research at Hargreaves Lansdown, explained that "ever rising inflation, the continued atrocities in Ukraine and central bank rate hikes" were to blame for damaging investor confidence.

She added that the platform's upcoming July fund flows indicated some optimism had returned to the market since these damning figures, although investors were still targeting funds with focus on capital preservation, indicating low confidence.

Globally, all equity regions bar one recorded net outflows in June, as only Japan saw positive net retail sales (£15m).

Global funds were the worst-performing, with outflows of £1.3bn, followed by UK funds (£690m), Europe funds (£445m) and Asia funds (£272m), while North America rounds out the pack at an almost flat £12m.

Total funds under management have fallen on the previous year, down to £1.4trn from June 2021's £1.5trn.

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