Equity funds had their highest monthly net retail outflows on record in August as UK savers fled market turmoil.

Funds had almost £3bn of outflows, according to new data from the Investment Association (IA), the fund managers' trade body.

August was the seventh month of net retail outflows this year, as savers took £2.6bn out of funds, taking outflows for the year to £14.6bn.

Chris Cummings, IA chief executive, said: “While August is traditionally a quieter month for fund sales, political and economic uncertainty continued to leave savers navigating challenging market dynamics.”

August’s record figure was driven by £1bn outflows from UK equities and £828m from Global equities.

Against that bond funds had inflows of just above £1bn, with Strategic Bond the best-selling sector with inflows of £288m.

Responsible investment funds saw modest inflows of £109m while tracker fund inflows were £412m, the second weakest inflow of the year. Tracker funds have only seen one monthly outflow this year.

Mr Cummings said that while bond funds saw inflows, in most IA sectors sales weakened or turned to outflow.

He said: “UK households are heading into a challenging autumn and winter and grappling with a cost-of-living crisis, which may have an impact on their ability to put money aside. With market dynamics in a state of flux, we could see investors react to the surging yield on gilts and UK corporate bonds, or bide their time until we see a period of relative calm.”

The best-selling sector in August was Strategic Bond with £288m, followed by Infrastructure on £205m and Mixed Bond, also on £205m.

Next were Volatility Managed with £194m and Corporate Bond with net retail sales of £172m.

The worst-selling IA sector in August 2022 was UK All Companies, which experienced outflows of £772m. 

Around 55% of retail sales totalling £12.8bn were sold through fund platforms, while a quarter of funds, totalling £5.9bn, were sold through intermediaries in August, slightly down from 29% in July.