UK investors pulled £3.7 billion out of funds in October 2022 – the ninth month of net retail outflows this year – according to Investment Association (IA) data.
Even though outflows persisted, net outflows for all main asset classes were lower in October than the previous month, except for mixed asset funds.
However, outflows remain significantly higher in October 2022 compared to a year prior, when net inflows reached £1.9 billion.
Total outflows in October 2022 were roughly half the value withdrawn a month prior, as UK savers took £7.6 billion out of funds in September 2022.
In September, UK market sentiment was shaped by the impact of then-chancellor Kwasi Kwarteng’s mini-budget.
The mini-budget resulted in market turmoil, causing the second-highest monthly outflow on record, as the gilt market nearly collapsed. Nearly all of these announcements were subsequently scrapped by Kwarteng’s successor.
Chris Cummings, chief executive of the IA, said: “Outflows slowed in October as markets settled following the gilt crisis in September, and investors took a wait-and-see approach ahead of the Autumn Statement, which saw an overwhelmingly calm reaction from markets.”
Despite overall outflows, investors did commit capital to passives and responsible mandates.
Tracker funds recovered during October. These returned to net retail inflows of £1.4 billion, which was the second-highest inflow into tracker funds this year.
Responsible investment funds under management reached £89 billion by October after the asset class experienced inflows of £131 million throughout the month.
The IA revealed flows into sustainable funds have remained positive since the Global Financial Crisis due to “sustained” demand.
This theme has also been present on the continent.
Positive inflows into sustainable funds are consistent with data published by the European Fund and Asset Management Association (EFAMA).
European UCITS and alternative investment funds recorded the worst outflows since the 2008 financial crisis, EFAMA data revealed earlier this month.
With gilt markets calming down in the UK, the IA data revealed domestic demand for fixed income strategies had recovered somewhat in October.
With inflows of £879 million, corporate bonds was the bestselling IA sector in October, closely followed by the short-term market, which experienced net retail sales of £875 million.
The worst-selling IA sector was targeted absolute return with outflows of £914 million.
Mixed asset funds also experienced high levels of outflows in October, with outflows of £808 million – the highest this year.
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