UK-based investors pulled £544m out of responsible investment strategies in September, the largest outflows on record, according to the Investment Association. Responsible investment funds ended the third quarter with £95bn in assets, a 6.9% share of funds under management.
Within the responsible investing arena, green and clean energy funds went on to perform particularly poorly in October. Ben Yearsley, director at Fairview Investing, observed: “If there was a story last month it was the pounding that green and clean energy got.”
IA UK All Companies funds suffered the most outflows of any sector in September, down £884m. Investors fell out of love with equities in general, taking £1.6bn from the asset class, after moderate inflows in August. Asia and North American equity funds enjoyed inflows while investors shunned Japan, Europe, global and UK equity funds.
Gilts were the most popular choice in September gaining £237m in inflows, perhaps reflecting expectations that the Bank of England’s hiking cycle is at or near its peak.
Corporate bond funds gained £209m of inflows, government bond funds netted £194m and sterling corpore bond funds brought in £192m.
Despite these figures, fixed income funds overall were net losers with outflows of £79m, although that is markedly less than August’s outflows of £298m.
Mixed asset funds, a perennially popular choice among UK savers, gained £781m of inflows in September after bringing in £478m in August.
Individual investors in the UK opted for passive over active management as tracker funds received a significant endorsement in September with net retail inflows of £991m, taking their overall assets under management to £301bn, which represents a 21.8% market share.
Overall, September was a month of outflows: net retail sales were down £1.4bn and net institutional sales fell by £2.9bn. In the third quarter overall, however, investors put in a net £1.2bn into funds. This compares to £3.9bn of inflows in the first quarter and £2.2bn of inflows between April and June.
Chris Cummings, chief executive of the Investment Association, said: “Investors continue to be squeezed by inflationary pressures and the cost of living, as net inflows into funds experience their second quarter of decline.”
Platforms continued to dominate the UK savings and investment market with a 43.5% share of gross retail fund sales in September. Other intermediaries including financial advisers had a 36.2% market share. Discretionary managers held a 6.1% piece of the pie, while direct gross retail sales amounted to a 4% market share. Execution only intermediaries attracted just 0.7% of fund sales.