Market uncertainty in January spurred UK savers to withdraw £642m from retail funds, the first outflows since March 2020.

Latest data from the Investment Association - collated prior to the Russian invasion of Ukraine - suggested a poor start to the year for fund managers as uncertainty took hold among investors.

Figures on the impact on fund flows since the invasion of Ukraine are not yet published but the Investment Association, the fund managers’ trade body which collates the figures, said the invasion had caused a “negative reaction” in markets.

According to latest data from the Investment Association most sectors saw outflows in January.

Key changes were: 

• Equity funds saw outflows of £1.3bn, driven in part by outflows of £1.6bn from UK equity funds and of £719m from North American equity funds, offset slightly by inflows to Global funds
• Overall retail funds under management declined from £1.59trn to £1.51trn in January 
• Money Market funds were the bestselling asset class in January with inflows of £820m
• Responsible investment funds saw reasonable net retail inflows of £743m. 

The worst-selling Investment Association sector in January was UK All Companies, which experienced outflows of £1.4 billion.

Chris Cummings, chief executive of the Investment Association, said: “Rising inflation and market uncertainty cast a shadow over the start of the year in the fund market, with the first net retail outflows since the first national lockdowns in March 2020. 

“Caution saw investors opt for diversified funds to help mitigate risks, and the strong sales to Short Term Money Market funds showed savers are waiting to see how markets will develop.

“Events have moved quickly since January, and the Russian invasion of Ukraine has seen a negative reaction from markets. The crisis is deeply tragic for Ukraine’s citizens and investors have acted to show support and swiftly complied with the latest sanctions provisions.”

FUNDS UNDER MANAGEMENT AND NET SALES 

BEST SELLING INVESTMENT ASSOCIATION SECTORS   

The five best-selling Investment Association sectors for January 2022 were: 

1. Short Term Money Market with net retail sales of £838 million
2. Global was second with net retail sales of £671 million.
3. Mixed Investment 40-85% Shares followed with net retail sales of £353 million.
4. Volatility Managed was fourth with net retail sales of £325 million.
5. Japan was fifth with £230 million.

NET RETAIL SALES BY ASSET CLASS 

Money Market funds was the best-selling asset class in January 2022, with £820 million in net retail sales. 

Mixed Asset funds was the second best-selling asset class, with £335 million of inflows. 

Property funds saw £12 million in outflows in January 2022.

Fixed Income was fourth with outflows of £76 million.  

Other funds (which includes the Targeted Absolute Return, Volatility Managed, and Unclassified sectors) saw £390m in outflows in January 2022.

Equity funds saw £1.3 billion of outflows.

NET RETAIL SALES OF EQUITY FUNDS BY REGION

Global was the best-selling equity fund region in January 2021, with net retail sales of £495 million.

Japan was second with net retail sales of £183 million. 

All other equity regions experienced outflows.

Asia funds saw £13 million in outflows, while Europe funds saw outflows of £136 million.

North America funds saw outflows of £719 million, and UK funds saw outflows of £1.6 billion.

TRACKER FUNDS 

Tracker funds saw a net retail inflow of £1.1 billion in January 2022. Tracker funds under management stood at £289 billion as of the end of January. Their overall share of industry funds under management was 19.1%. 

RESPONSIBLE INVESTMENT FUNDS 

Responsible investment funds saw a net retail inflow of £743 million in January 2022. Responsible investment funds under management stood at £84 billion as of the end of January. Their overall share of industry funds under management was 5.5%. 

GROSS RETAIL SALES BY DISTRIBUTION CHANNEL 

In January, gross retail sales for UK fund platforms totalled £11.3 billion, representing a market share of 47.1%.  

Gross retail sales through Other UK Intermediaries including IFAs were £7.6 billion, representing a market share of 31.7%.  

Direct gross retail sales in December were £815 million, representing a market share of 3.4%.