UK fund flows in December 2018 look set to be remembered as their worst level for just over two years due to market volatility.
Flows – at £39.8 million (€44.3 million) – were at their lowest since October 2016 and nearly 100% lower than in December 2017, according to the Fund Flow Index (FFI) from Calastone.
Furthermore, December’s poor reading meant that the fourth quarter of 2018 was the weakest quarter for UK funds since the second quarter of 2016, with net inflows of just £3.1 billion.
For 2018 overall, fund inflows were a third lower year-on-year as a strong first half gave way to an increasingly difficult second.
Calastone, which operates a fund transaction network, said its monthly index tracks orders representing millions of individual investor decisions and is the most comprehensive measure of UK fund flows.
Most major asset classes saw outflows in December, but the overall figure just managed to stay in positive territory due to investments in mixed asset funds, which has £704 million of inflows.
Calastone said these funds habitually see steadier trading than other asset classes, as they are the stalwarts of many regular savings plans, though December was still the second weakest month – after November – in two years for the category.
Property funds had the largest outflows. Equity funds saw net outflows of “only” £7.8 million, but with wide divergent between categories. Funds investing in European stocks performed the worst, with £257 million of outflows, followed by North America, equity income, emerging markets and Asia-Pacific. UK equity funds saw modest inflows.
Edward Glyn, Calastone’s head of global markets, said December had rounded off a difficult year for much of the UK fund management industry.
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